Final Results - Part 6 of 8

RNS Number : 6654S

Standard Life Aberdeen plc

13 March 2019

 

Standard Life Aberdeen plc

Full Year Results 2018

Part 6 of 8

 

 

31.   Insurance contracts, investment contracts and reinsurance contracts

 (i)     Classification of insurance and investment contracts

The measurement basis of assets and liabilities arising from life and pensions business contracts is dependent upon the classification of those contracts as either insurance or investment contracts.

Insurance contracts

A contract is classified as an insurance contract only if it transfers significant insurance risk. Insurance risk is significant if an insured event could cause an insurer to pay significant additional benefits to those payable if no insured event occurred, excluding scenarios that lack commercial substance. Our judgement is that where death benefits exceed maturity benefits by 10% or more a contract is classified as an insurance contract, by 5% or less it is not an insurance contract. There are no material contracts within the 5% to 10% range. A contract that is classified as an insurance contract remains an insurance contract until all rights and obligations are extinguished or expire.

Investment contracts

Life and pensions business contracts that are not classified as insurance contracts are classified as investment contracts.

Participating contracts

The Group has written insurance and investment contracts which contain discretionary participating features (e.g. with profits business). These contracts provide a contractual right to receive additional benefits as a supplement to guaranteed benefits. These additional benefits are based on the performance of with profits funds and their amount and timing is at the discretion of the Group. These contracts are referred to as participating insurance contracts if they contain a feature that transfers significant insurance risk and otherwise as participating investment contracts.

Hybrid contracts

Generally, life and pensions business product classes are sufficiently homogeneous to permit a single classification at the level of the product class. However, in some cases, a product class may contain individual contracts that fall across multiple classifications (hybrid contracts). For certain significant hybrid contracts our judgement is that it is appropriate to separate the product class into the insurance element, a non-participating investment element and a participating investment element, so that each element is accounted for separately.

Embedded derivatives

Where a contract contains a feature that meets the definition of both an insurance contract and a derivative, the contract is classified in its entirety as an insurance contract.

(ii)     Income statement presentation - insurance and participating investment contracts

For insurance contracts and participating investment contracts, IFRS 4 Insurance Contracts permits the continued application, for income statement presentation purposes, of accounting policies that were being used at the date of transition to IFRS, except where a change is deemed to make the financial statements more relevant to the economic decision-making needs of users and no less reliable, or more reliable, and no less relevant to those needs. Therefore the Group applies accounting policies based on the Association of British Insurers Statement of Recommended Practice issued in 2005 (ABI SORP) as described below.

Premiums received on insurance contracts and participating investment contracts are recognised as revenue in the consolidated income statement when due for payment, except for unit linked premiums which are accounted for when the corresponding liabilities are recognised. For single premium business, this is the date from which the policy is effective. For regular (and recurring) premium contracts, receivables are established at the date when payments are due.

Claims paid on insurance contracts and participating investment contracts are recognised as expenses in the consolidated income statement. Maturity claims and annuities are accounted for when due for payment. Surrenders are accounted for when paid or, if earlier, on the date when the policy ceases to be included within the calculation of the insurance liability. Death claims and all other claims are accounted for when notified.

When a policyholder exercises an option within an investment contract to utilise withdrawal proceeds from the investment contract to secure future benefits which contain significant insurance risk, the related investment contract liability is derecognised and an insurance contract liability is recognised. The withdrawal proceeds which are used to secure the insurance contract are recognised as premium income.

Claims payable include the direct costs of settlement. Reinsurance recoveries are accounted for in the same period as the related claim.

The change in insurance and participating investment contract liabilities, comprising the full movement in the corresponding liabilities during the period, is recognised in the consolidated income statement. This also includes the movement in unallocated divisible surplus (UDS) in the period. However, where movements in assets and liabilities which are attributable to participating policyholders are recognised in other comprehensive income, the change in UDS arising from these movements is not recognised in the consolidated income statement as it is also recognised in other comprehensive income.

(iii)    Measurement - insurance and participating investment contract liabilities

For insurance contracts and participating investment contracts, IFRS 4 Insurance Contracts permits the continued application, for measurement purposes, of accounting policies that were being used at the date of transition to IFRS, except where a change is deemed to make the financial statements more relevant to the economic decision-making needs of users and no less reliable, or more reliable, and no less relevant to those needs. Therefore the Group applies accounting policies based on the ABI SORP as described below. As was permitted under the ABI SORP, the Group adopts local regulatory valuation methods, adjusted for consistency with asset measurement policies, for the measurement of liabilities under insurance contracts and participating investment contracts issued by overseas subsidiaries and associates.

 

(iv)    Measurement - participating contract liabilities

Participating contract liabilities are analysed into the following components:

·  Participating insurance contract liabilities

·  Participating investment contract liabilities

·  Present value of future profits on non-participating contracts, which is treated as a deduction from gross participating contract liabilities

·  Unallocated divisible surplus

The policy for measuring each component is noted below.

Participating insurance and investment contract liabilities

Participating contract liabilities arising under contracts issued by with profits funds which were within the scope of the Prudential Regulation Authority (PRA) realistic capital regime prior to the introduction of Solvency II are measured on the PRA realistic basis that was used in the PRA realistic capital regime. Under this approach, the value of participating insurance and participating investment contract liabilities in each with profits fund is calculated as:

·  With profits benefits reserves (WPBR) for the fund as determined under the PRA realistic basis, plus

·  Future policy related liabilities (FPRL) for the fund as determined under the PRA realistic basis, less

·  Any amounts due to equity holders included in FPRL, less

·  The portion of future profits on non-participating contracts included in FPRL not due to equity holders, where this portion can be separately identified

The WPBR is primarily based on the retrospective calculation of accumulated asset shares. The aggregate value of individual policy asset shares reflects the actual premium, expense and charge history of each policy. The net investment return credited to the asset shares is consistent with the return achieved on the assets notionally backing participating business. Any mortality deductions are based on published mortality tables adjusted where necessary for experience variations. For those asset shares on an expense basis, the allowance for expenses attributed to the asset share is, as far as practical, the appropriate share of the actual expenses incurred or charged to the fund. For those on a charges basis, the allowance is consistent with the charges for an equivalent unit linked policy. The FPRL comprises other components such as a market consistent stochastic valuation of the cost of options and guarantees.

Prior to the sale of Standard Life Assurance Limited (SLAL) to Phoenix Group Holdings Plc (Phoenix), the Group's principal with profits fund was the Heritage With Profits Fund (HWPF). The application to the HWPF of the Group's accounting policy for participating insurance and investment contract liabilities is described below. This policy for the HWPF now applies, for equity accounting purposes, to the Group's associate Phoenix.

The participating contracts held in the HWPF were issued by a with profits fund that fell within the scope of the PRA realistic capital regime. Under the Scheme of Demutualisation (the Scheme), the residual estate of the HWPF exists to meet amounts which may be charged to the HWPF under the Scheme. However, to the extent that SLAL's board is satisfied that there is an excess residual estate, it shall be distributed over time as an enhancement to final bonuses payable on the remaining eligible policies invested in the HWPF. This planned enhancement to the benefits under with profits contracts held in the HWPF is included in the FPRL under the PRA realistic basis, resulting in a realistic surplus of nil. Applying the policy noted above, this planned enhancement is therefore included within the measurement of participating contract liabilities.

The Scheme provides that certain defined cash flows (recourse cash flows) arising in the HWPF on specified blocks of UK and Ireland business, both participating and non-participating, may be transferred out of that fund when they emerge, being transferred to the Shareholder Fund (SHF) or the Proprietary Business Fund (PBF) of SLAL, and thus accrue to the ultimate benefit of equity holders of the company. Under the Scheme, such transfers are subject to certain constraints in order to protect policyholders. The Scheme also provides for additional expenses to be charged by the PBF to the HWPF in respect of Germany branch business in SLAL.

Under the PRA realistic basis, the discounted value of expected future cash flows on participating contracts not reflected in the WPBR is included in FPRL (as a reduction in FPRL where future cash flows were expected to be positive). The discounted value of expected future cash flows on non-participating contracts not reflected in the measure on non-participating liabilities is recognised as a separate asset (where future cash flows are expected to be positive). The Scheme requirement to transfer future recourse cash flows out of the HWPF is recognised as an addition to FPRL. The discounted value of expected future cash flows on non-participating contracts can be apportioned between those included in the recourse cash flows and those retained in the HWPF for the benefit of policyholders.

Applying the policy noted above:

·  The value of participating insurance and participating investment contract liabilities on the consolidated statement of financial position is reduced by future expected (net positive) cash flows arising on participating contracts

·  Future expected cash flows on non-participating contracts are not recognised as an asset of the HWPF on the consolidated statement of financial position. However, future expected cash flows on non-participating contracts that are not recourse cash flows under the Scheme are used to adjust the value of participating insurance and participating investment contract liabilities on the consolidated statement of financial position.

Some participating contract liabilities arise under contracts issued by a non-participating fund with a with profits investment element then transferred to a with profits fund within SLAL that fell within the scope of the PRA's realistic capital regime. The with profits investment element of such contracts was measured as described above. Any liability for insurance features retained in the non-participating fund was measured using the gross premium method applicable to non-participating contracts (see Section (v)).

Present value of future profits (PVFP) on non-participating contracts held in a with profits fund

An amount is recognised for the PVFP on non-participating contracts held in the HWPF since the determination of the realistic value of liabilities for with profits contracts in the HWPF takes account of this value. The amount is recognised as a deduction from liabilities. As this amount can be apportioned between an amount recognised in the realistic value of with profits contract liabilities and an amount recognised in UDS, the apportioned amounts are reflected in the measurement of participating contract liabilities and UDS respectively.

Unallocated divisible surplus (UDS)

The UDS comprises the difference between the assets and all other recognised liabilities in with profits funds. This amount is recognised as a liability when it is not considered to be allocated to shareholders due to uncertainty regarding transfers from these funds to equity holders.

In relation to the HWPF, amounts are considered to be allocated to equity holders when they emerge as recourse cash flows within the HWPF.

As a result of the policies for measuring the HWPF's assets and all its other recognised liabilities:

·  The UDS of the HWPF comprises the value of future recourse cash flows on participating contracts (but not the value of future recourse cash flows on non-participating contracts), the value of future additional expenses to be charged on Germany branch business and the effect of any measurement differences between the Realistic Balance Sheet value and IFRS accounting policy value of all assets and all liabilities other than participating contract liabilities recognised in the HWPF

·  The recourse cash flows are recognised as they emerge as an addition to equity holders' profits if positive or as a deduction if negative. As the additional expenses are charged in respect of the Germany branch business, they are recognised as an addition to equity holders' profits.

(v)     Measurement - non-participating insurance contract liabilities

Measurement for UK business is based on a best estimate with a margin for prudence.

UK and European insurance business

The liability for annuity in payment contracts was measured by discounting the expected future annuity payments together with an appropriate estimate of future expenses at an assumed rate of interest derived from yields on the underlying assets.

Other non-participating insurance contracts are measured using the gross premium method. In general terms, a gross premium valuation basis is one in which the premiums brought into account are the full amounts receivable under the contract. The method includes explicit estimates of premiums, expected claims and costs of maintaining contracts. Cash flows are discounted at the valuation rate of interest determined to reflect conditions at the reporting date in accordance with Prudential Regulation Authority (PRA) requirements that existed at 31 December 2015.

UK Associates - Phoenix

Non-participating insurance contract liabilities are measured, for equity accounting purposes, at best estimate with an explicit margin for prudence with the process used to determine assumptions based on Solvency II data. The valuation interest rate is a risk free rate (swap curve plus 10 bps) with an explicit adjustment for illiquidity in respect of assets backing illiquid liabilities. Demographic assumptions are based on a best estimate with an explicit margin for demographic risks.

Standard Life (Asia) Limited

The Group's policy for measuring liabilities for non-participating insurance contracts issued by overseas subsidiaries is to apply the valuation technique used in the issuing entity's local statutory or regulatory reporting.

(vi)    Measurement - liability adequacy test

The Group applies a liability adequacy test at each reporting date to ensure that the insurance and participating contract liabilities (less related deferred acquisition costs) are adequate in the light of the estimated future cash flows. This test is performed by comparing the carrying value of the liability and the discounted projections of future cash flows.

If a deficiency is found in the liability (i.e. the carrying value amount of its insurance liabilities is less than the future expected cash flows), that deficiency is provided for in full. The deficiency is recognised in the consolidated income statement.

(vii)   Reinsurance contracts

Contracts with reinsurers are assessed to determine whether they contain significant insurance risk. Contracts that did not give rise to a significant transfer of insurance risk to the reinsurer are considered financial reinsurance and are accounted for in a manner consistent with financial instruments.

Contracts that gave rise to a significant transfer of insurance risk to the reinsurer are assessed to determine whether they contained an element that did not transfer significant insurance risk and which could be measured separately from the insurance component. Where such elements are present, they are accounted for separately with any deposit element being accounted for in a manner consistent with financial instruments. The remaining elements, or where no such separate elements are identified, the entire contracts, are classified as reinsurance contracts.

Reinsurance contracts are measured using valuation techniques and assumptions that are consistent with the valuation techniques and assumptions used in measuring the underlying policy benefits and taking into account the terms of the reinsurance contract.

Reinsurance recoveries due from reinsurers and reinsurance premiums due to reinsurers under reinsurance contracts that are contractually due at the reporting date are separately recognised in receivables and other financial assets and other financial liabilities respectively unless a right of offset exists, in which case the net amount is reported on the consolidated statement of financial position.

Expenses, including interest, arising under elements of contracts with reinsurers that do not transfer significant insurance risk are recognised on an accruals basis in the consolidated income statement as expenses under arrangements with reinsurers.

(a)     Insurance contract premium income

		2018	2017 restated1
		£m	£m
Gross earned premium		75	91
Premium ceded to reinsurers		(2)	(2)
Insurance contract premium income from continuing operations		73	89

¹    Comparatives for 2017 have been restated to reflect the classification of the UK and European insurance business as discontinued operations. Refer Note 1.

(b)     Insurance contract claims and change in liabilities

		2018	2017 restated1
	Notes	£m	£m
Claims and benefits paid		62	53
Claim recoveries from reinsurers		(4)	(1)
Net insurance claims		58	52
Change in reinsurance assets and liabilities	31(d)	5	(7)
Change in insurance contract liabilities	31(d)	(62)	156
Insurance contract claims and change in liabilities from continuing operations		1	201

¹    Comparatives for 2017 have been restated to reflect the classification of the UK and European insurance business as discontinued operations. Refer Note 1.

(c)     Insurance and participating investment contract liabilities

		2018	2017
		£m	£m
Non-participating insurance contract liabilities		3	22,740
Participating contract liabilities:
Participating insurance contract liabilities		-	14,659
Participating investment contract liabilities		-	15,313
Unallocated divisible surplus		-	675
Participating contract liabilities		-	30,647

Non-participating insurance contract liabilities includes UK immediate annuities of £nil (2017: £12,667m) and UK deferred annuities of £nil (2017: £1,289m).

(d)     Change in liabilities and reinsurance contracts

The movement in insurance contract liabilities, participating investment contract liabilities and reinsurance contracts during the year was as follows:

	Participating insurance contract liabilities	Non-participating insurance contract liabilities	Participating investment contract liabilities	Total insurance and participating contract liabilities	Reinsurance contracts	Net
2018	£m	£m	£m	£m	£m	£m
At 1 January	14,659	22,740	15,313	52,712	(4,811)	47,901
Reclassified as held for sale during the year	(14,659)	(22,736)	(15,313)	(52,708)	4,811	(47,897)
Change in contract liabilities recognised in the consolidated income statement1	-	(1)	-	(1)	-	(1)
At 31 December	-	3	-	3	-	3

¹    Total change in contract liabilities recognised in the consolidated income statement in the table above excludes (£61m) (2017: (£100m)) and £5m (2017: £7m) of insurance and participating contract liabilities and reinsurance contracts respectively relating to assets and liabilities held for sale.

	Participating insurance contract liabilities	Non-participating insurance contract liabilities	Participating investment contract liabilities	Total insurance and participating contract liabilities	Reinsurance contracts	Net
2017	£m	£m	£m	£m	£m	£m
At 1 January	15,151	23,422	15,537	54,110	(5,386)	48,724
Reclassified as held for sale during the year	-	(550)	-	(550)	7	(543)
Change in contract liabilities recognised in the consolidated income statement
Expected change	(896)	(898)	(1,034)	(2,828)	397	(2,431)
Methodology/modelling changes	(58)	10	51	3	-	3
Effect of changes in
Economic assumptions	(37)	(81)	79	(39)	8	(31)
Non-economic assumptions	(66)	(235)	6	(295)	154	(141)
Effect of
Economic experience	126	532	573	1,231	3	1,234
Non-economic experience	15	(381)	39	(327)	6	(321)
New business	-	878	33	911	-	911
Total change in contract liabilities recognised in the consolidated income statement1	(916)	(175)	(253)	(1,344)	568	(776)
Foreign exchange adjustment	424	43	29	496	-	496
At 31 December	14,659	22,740	15,313	52,712	(4,811)	47,901

¹    Total change in contract liabilities recognised in the consolidated income statement in the table above excludes (£100m) and £7m of insurance and participating contract liabilities and reinsurance contracts respectively relating to assets and liabilities held for sale.

(e)     Movement in components of unallocated divisible surplus (UDS)

The movement in UDS was as follows:

		2018	2017
		£m	£m
At 1 January		675	585
Reclassified as held for sale during the year		(675)	-
Change in UDS recognised in the consolidated income statement		-	140
Change in UDS recognised in other comprehensive income		-	(12)
Foreign exchange adjustment		-	(38)
At 31 December		-	675

(f)      Expected settlement and recovery

An indication of the term to contracted maturity/repricing date for insurance and investment contract liabilities is given in Note 39. Reinsurance contracts are generally structured to match liabilities on a class of business basis. This has a mixture of terms. The reinsurance assets are therefore broadly expected to be realised in line with the settlement of liabilities (as per the terms of the particular treaty) within a reinsured class of business.

32.   Non-participating investment contracts

Unit linked non-participating investment contracts are separated into two components being an investment management services component and a financial liability. All fees and related administrative expenses are deemed to be associated with the investment management services component (refer Note 4, Note 15 and Note 36). The financial liability component is designated at FVTPL as it is implicitly managed on a fair value basis as its value is directly linked to the market value of the underlying portfolio of assets.

Contributions received on non-participating investment contracts are treated as policyholder deposits and not reported as revenue in the consolidated income statement.

Withdrawals paid out to policyholders on non-participating investment contracts are treated as a reduction to policyholder deposits and not recognised as expenses in the consolidated income statement.

Investment return and related benefits credited in respect of non-participating investment contracts are recognised in the consolidated income statement as changes in investment contract liabilities.

The change in non-participating investment contract liabilities was as follows:

		2018	2017
	Notes	£m	£m
At 1 January		105,769	102,063
Reclassified as held for sale during the year		(104,174)	(68)
Acquired through business combinations		-	1,411
Contributions		183	9,579
Account balances paid on surrender and other terminations in the year		(235)	(15,903)
Change in non-participating investment contract liabilities recognised in the consolidated income statement1		(72)	8,954
Recurring management charges		(3)	(490)
Foreign exchange adjustment		-	223
At 31 December	33	1,468	105,769

¹    Change in non-participating investment contract liabilities recognised in the consolidated income statement in the table above excludes (£6m) (2017: £9m) in relation to non-participating investment contract liabilities classified as held for sale.

33.   Financial liabilities

Management determines the classification of financial liabilities at initial recognition. Financial liabilities are designated as at FVTPL when they are managed and their performance evaluated on a fair value basis. The methods and assumptions used to determine fair value of financial liabilities designated at FVTPL are discussed in Note 41. Financial liabilities which are not derivatives and not FVTPL are measured at amortised cost.

		Designated as at fair value through profit or loss	Held for trading	Cash flow hedge	Financial liabilities measured at amortised cost	Total
2018	Notes	£m	£m	£m	£m	£m
Non-participating investment contract liabilities	39	1,468	-	-	-	1,468
Third party interest in consolidated funds	39	254	-	-	-	254
Subordinated liabilities	34	-	-	-	1,081	1,081
Derivative financial liabilities	21	-	6	-	-	6
Other financial liabilities	37	29	-	-	1,133	1,162
Total		1,751	6	-	2,214	3,971

		Designated as at fair value through profit or loss	Held for trading	Cash flow hedge	Financial liabilities measured at amortised cost	Total
2017	Notes	£m	£m	£m	£m	£m
Non-participating investment contract liabilities	39	105,765	-	-	4	105,769
Deposits received from reinsurers	39	-	-	-	4,633	4,633
Third party interest in consolidated funds	39	16,457	-	-	-	16,457
Subordinated liabilities	34	-	-	-	2,253	2,253
Derivative financial liabilities	21	-	780	33	-	813
Other financial liabilities	37	25	-	-	3,871	3,896
Total		122,247	780	33	10,761	133,821

34.   Subordinated liabilities

Subordinated liabilities are debt instruments issued by the Company which rank below its other obligations in the event of liquidation but above the share capital. Subordinated liabilities are initially recognised at the value of proceeds received after deduction of issue expenses. Subsequent measurement is at amortised cost using the effective interest rate method.

		2018		2017
	Notes	Principal amount	Carrying value	Principal amount	Carrying value
Capital notes
7.0% US Dollar fixed rate perpetual		-	-	$500m	£377m
Subordinated notes
4.25% US Dollar fixed rate due 30 June 2028		$750m	£581m	$750m	£556m
5.5% Sterling fixed rate due 4 December 2042		£500m	£500m	£500m	£500m
Subordinated guaranteed bonds
6.75% Sterling fixed rate perpetual		-	-	£500m	£502m
Mutual Assurance Capital Securities
6.546% Sterling fixed rate perpetual		-	-	£300m	£318m
Total subordinated liabilities	39		£1,081m		£2,253m

A description of the key features of the Group's subordinated liabilities as at 31 December 2018 is as follows:

	4.25% US Dollar fixed rate1,2 (from 15 November 2018)	4.25% US Dollar fixed rate1,2 (until 15 November 2018)	5.5% Sterling fixed rate
Principal amount	$750,000,000	$750,000,000	£500,000,000
Issue date	18 October 2017	18 October 2017	4 December 2012
Maturity date	30 June 2028	30 June 2048	4 December 2042
Callable at par at option of the Company from	Not applicable	30 June 2028 and on every interest payment date (semi-annually) thereafter	4 December 2022 and on every interest payment date (semi-annually) thereafter
If not called by the Company interest will reset to	Not applicable	2.915% over the five-year Treasury rate (and at each fifth anniversary)	4.85% over the five-year gilt rate (and at each fifth anniversary)

¹    The cash flows arising from the US dollar subordinated notes give rise to foreign exchange exposure which the Group manages with a cross-currency swap designated as a cash flow hedge. Refer Note 21 for further details.

²    During the year to 31 December 2018, the terms of the 4.25% US Dollar fixed rate subordinated notes were renegotiated to allow the notes to qualify as regulatory capital under CRD IV (see Note 47).

The difference between the fair value and carrying value of the subordinated liabilities is presented in Note 41. A reconciliation of movements in subordinated liabilities in the year is provided in Note 42.

The principal amount of all the subordinated liabilities is expected to be settled after more than 12 months. The accrued interest on the subordinated liabilities of £2m (2017: £44m) is expected to be settled within 12 months.

During the year to 31 December 2018, the Group redeemed/repurchased subordinated liabilities with the following key features

	7% US Dollar fixed rate	6.75% Sterling fixed rate	6.546% Sterling fixed rate
Principal amount	$500,000,000	£500,000,000	£300,000,000
Issue date	1 March 2013	12 July 2002	4 November 2004
Maturity date	Perpetual	Perpetual	Perpetual
Callable at par at option of the Company from	1 March 2018 and on any interest payment date thereafter	12 July 2027 and on every fifth anniversary thereafter	6 January 2020 and on every anniversary thereafter
If not called by the Company interest will reset to	Not applicable	2.85% over the gross redemption yield on the appropriate five-year benchmark gilt rate	2.7% over the gross redemption yield on the appropriate one-year benchmark gilt rate

The 7% US Dollar fixed rate perpetual capital notes with a principal amount of $500m were redeemed on 1 March 2018. The capital notes had been reclassified from equity during the year ended 31 December 2017. Refer Note 30 for further details.

The 6.75% Sterling fixed rate subordinated guaranteed bonds and 6.546% Sterling fixed rate Mutual Assurance Capital Securities with principal amounts of £500m and £300m respectively were redeemed on 25 October 2018. These debt instruments were classified as equity for the period from 30 August 2018 to their redemption/repurchase on 25 October 2018. Refer Note 30 for further details.

35.   Pension and other post-retirement benefit provisions

The Group operates two types of pension plans:

·  Defined benefit plans which provide pension payments upon retirement to members as defined by the plan rules. All of the Group's defined benefit plans, with the exception of a small plan in Ireland, are closed to future service accrual.

·  Defined contribution plans where the Group makes contributions to a member's pension plan but has no further payment obligations once the contributions have been paid

The Group's liabilities in relation to its defined benefit plans are valued by at least annual actuarial calculations. The Group has funded these liabilities in relation to its UK and Ireland defined benefit plans by ring-fencing assets in trustee-administered funds. The Group has further smaller defined benefit plans some of which are unfunded.

The statement of financial position reflects a net asset or net liability for each defined benefit pension plan. The liability recognised is the present value of the defined benefit obligation (estimated future cash flows are discounted using the yields on high quality corporate bonds) less the fair value of plan assets, if any. If the fair value of the plan assets exceeds the defined benefit obligation, a pension surplus is only recognised if the Group considers that it has an unconditional right to a refund of the surplus from the plan. The amount of surplus recognised will be limited by tax and expenses. Our judgement is that, in the UK, an authorised surplus tax charge is not an income tax. Consequently, the surplus is recognised net of this tax charge rather than the tax charge being included within deferred taxation.

For the principal defined benefit plan (UK Standard Life Group plan), the Group considers that it has an unconditional right to a refund of a surplus, assuming the gradual settlement of the plan liabilities over time until all members have left the plan. The plan trustees can purchase annuities to insure member benefits and can, for the majority of benefits, transfer these annuities to members. The trustees cannot unconditionally wind up the plan or use the surplus to enhance member benefits without employer consent. Our judgement is that these trustee rights do not prevent us from recognising an unconditional right to a refund and therefore a surplus.

Net interest income (if a plan is in surplus) or interest expense (if a plan is in deficit) is calculated using yields on high quality corporate bonds and recognised in the consolidated income statement. A current service cost is also recognised which represents the expected present value of the defined benefit pension entitlement earned by members in the period. A past service cost is also recognised which represents the change in the present value of the defined benefit obligation for service in prior periods, resulting from an amendment or curtailment to a plan.

Remeasurements, which include gains and losses as a result of changes in actuarial assumptions, the effect of the limit on the plan surplus and returns on plan assets (other than amounts included in net interest) are recognised in other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

For defined contribution plans, the Group pays contributions to separately administered pension plans. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised in current service cost in the consolidated income statement as staff costs and other employee-related costs when they are due.

Defined contribution plans

The defined contribution plans comprise a mixture of arrangements depending on the employing entity and other factors. Some of these plans are located within the same legal vehicles as defined benefit plans. The Group contributes a percentage of pensionable salary to each employee's plan. The contribution levels vary by employing entity and other factors.

Defined benefit plans
UK plans
These plans are governed by trustee boards, which comprise employer and employee nominated trustees and an independent trustee. The plans are subject to the statutory funding objective requirements of the Pensions Act 2004, which require that plans be funded to at least the level of their technical provisions (an actuarial estimate of the assets needed to provide for benefits already built-up under the plan). The trustees perform regular valuations to check that the plans meet the statutory funding objective. While the IAS 19 valuation reflects a best estimate of the financial position of the plan, the funding valuation reflects a prudent estimate. There is no material difference in how assets are measured. The funding measure of liabilities ('technical provisions') and the IAS 19 measure are materially different. The key differences are the discount rate and inflation assumptions. While IAS 19 requires that the discount rate reflect corporate bond yields, the funding measure discount rate reflects a prudent estimate of future investment returns based on the actual investment strategy. The funding valuation adopts a market consistent measure of inflation without any adjustment. The IAS 19 assumption incorporates an adjustment to remove the inflation risk premium believed to exist within market prices. The trustees set the plan investment strategy to protect the ratio of plan assets to the trustees' measure of technical provisions. This investment strategy does not aim to protect the IAS 19 surplus or the ratio of plan assets to the IAS 19 measure of liabilities. After consulting the relevant employers, the trustees prepare statements of funding and investment principles and set a schedule of contributions. If necessary, this schedule includes a recovery plan that aims to restore the funding level to the level of the technical provisions.
UK Standard Life Group plan (principal plan)	This is the Group's principal defined benefit plan. The plan closed to new membership in 2004 and changed from a final salary basis to a revalued career average salary basis in 2008. Accrual ceased in April 2016. The transfer of employees to Phoenix, in connection with the sale of our UK and European insurance business, caused a curtailment in this plan that reduced plan liabilities by £42m. However, a plan amendment was agreed that reduced this fall in liabilities to £18m. These movements are recognised within past service cost, together with the associated movement in the asset ceiling. Following a High Court ruling against a third party's pension scheme, that requires that scheme to address the inequalities in the statutory benefits paid to men and women, an allowance for assumed equalisation has been introduced for our principal defined benefit plan at 31 December 2018. The estimated impact is recognised as a past service cost, though is not material. The funding of the plan depends on the statutory valuation performed by the trustees, and the relevant employers, with the assistance of the scheme actuary - i.e. not the IAS 19 valuation. The funding valuation was last completed as at 31 December 2016, and measured plan assets and liabilities to be £4.9bn and £4.2bn respectively. This corresponds to a surplus of £0.7bn and funding level of 117%. As there is currently no deficit, no recovery plan is required.
Other UK plans	The Group also operates two UK defined benefit plans as a result of the merger with Aberdeen. These plans are final salary based, with benefits depending on members' length of service and salary prior to retirement. At the last statutory valuation date, these plans were in deficit and the Group agreed funding plans which aimed to eliminate the deficits, with the plans' trustees. At 31 December 2018, one of the two schemes is now in surplus on an IAS 19 basis.
Other plans
Ireland Standard Life plan	In December 2009 this plan closed to new membership and changed from a final salary basis to a career average revalued earnings (CARE) basis. Following the sale of the UK and European insurance business, there remains less than 10 employees that continue to accrue benefits under this plan. The transfer of employees to Phoenix, in connection with the sale of our UK and European insurance business, caused a curtailment in this plan that reduced plan liabilities by £4m. This movement is recognised in past service cost. At the last trustee valuation, effective 1 January 2016, the plan was 70% funded on an ongoing basis.
Other	The Group operates smaller funded and unfunded defined benefit plans in other countries.

Plan regulations

The plans are administered according to local laws and regulations in each country. Responsibility for the governance of the plans rests with the relevant trustee boards (or equivalent).

 (a)    Analysis of amounts recognised in the consolidated income statement

The amounts recognised in the consolidated income statement for defined contribution and defined benefit plans are as follows:

		2018	2017 restated1
		£m	£m
Current service cost		67	46
Past service cost		(15)	----
Net interest income		(27)	(28)
Administrative expenses		2	3
Expense from continuing operations recognised in the consolidated income statement		27	21

¹    Comparatives for 2017 have been restated to reflect the classification of the UK and European insurance business as discontinued operations. Refer Note 1.

Contributions made to defined contribution plans are included within current service cost, with the balance attributed to the Group's defined benefit plans.

Contributions to defined benefit plans in the year ended 31 December 2018 were £37m (2017: £12m). Expected contributions to defined benefit plans in 2019 are £18m and are not expected to materially change over the next three to five years. These include £33m in 2018 and £15m contributions expected in 2019 to Aberdeen UK plans and the Ireland Standard Life plan in respect of deficit funding agreed with the trustees. The current deficit on these plans is £35m.

(b)     Analysis of amounts recognised in the consolidated statement of financial position

	2018			2017
	Principal plan	Other	Total	Principal plan	Other	Total
	£m	£m	£m	£m	£m	£m
Present value of funded obligation	(2,542)	(311)	(2,853)	(2,839)	(345)	(3,184)
Present value of unfunded obligation	-	(3)	(3)	-	(9)	(9)
Fair value of plan assets	4,251	276	4,527	4,530	276	4,806
Effect of limit on plan surplus	(598)	-	(598)	(592)	-	(592)
Net asset/(liability)	1,111	(38)	1,073	1,099	(78)	1,021

The principal plan surplus is considered to be recoverable as a right to a refund exists. The surplus has been reduced to reflect an authorised surplus payments charge that would arise on a refund.

(c)     Movement in the net defined benefit asset

	Present value of obligation	Fair value of plan assets	Total	Effect of limit on plan surpluses	Total
2018	£m	£m	£m	£m	£m
At 1 January	(3,193)	4,806	1,613	(592)	1,021
Reclassified as held for sale during the year	8	-	8	-	8
Total expense
Current service cost	(5)	-	(5)	1	(4)
Past service cost	21	-	21	(6)	15
Interest (expense)/income	(80)	122	42	(15)	27
Administrative expenses	(3)	-	(3)	1	(2)
Total (expense)/income recognised in consolidated income statement	(67)	122	55	(19)	36
Remeasurements
Return on plan assets, excluding amounts included in interest income	-	(253)	(253)	-	(253)
Loss from change in financial assumptions	224	-	224	-	224
Experience gains	(13)	-	(13)	-	(13)
Change in effect of limit on plan surplus	-	-	-	13	13
Remeasurement (losses)/gains recognised in other comprehensive income	211	(253)	(42)	13	(29)
Exchange differences	(1)	1	-	-	-
Employer contributions	-	37	37	-	37
Benefit payments	186	(186)	-	-	-
At 31 December	(2,856)	4,527	1,671	(598)	1,073

	Present value of obligation	Fair value of plan assets	Total	Effect of limit on plan surpluses	Total
2017	£m	£m	£m	£m	£m
At 1 January	(3,334)	4,999	1,665	(627)	1,038
Acquired through business combinations	(221)	191	(30)	-	(30)
Total expense
Current service cost	(3)	-	(3)	-	(3)
Interest (expense)/income	(84)	128	44	(16)	28
Administrative expenses	(3)	-	(3)	-	(3)
Total (expense)/income recognised in consolidated income statement	(90)	128	38	(16)	22
Remeasurements
Return on plan assets, excluding amounts included in interest income	-	69	69	-	69
Loss from change in demographic assumptions	(111)	-	(111)	-	(111)
Loss from change in financial assumptions	(37)	-	(37)	-	(37)
Experience gains	10	-	10	-	10
Change in effect of limit on plan surplus	-	-	-	51	51
Remeasurement (losses)/gains recognised in other comprehensive income	(138)	69	(69)	51	(18)
Exchange differences	(5)	2	(3)	-	(3)
Employer contributions	-	12	12	-	12
Benefit payments	595	(595)	-	-	-
At 31 December	(3,193)	4,806	1,613	(592)	1,021

 (d)    Defined benefit plan assets

Investment strategy is directed by the trustee boards (where relevant) who pursue different strategies according to the characteristics and maturity profile of each plan's liabilities. Assets and liabilities are managed holistically to create a portfolio with the dual objectives of return generation and liability management. In the principal plan this is achieved through a diversified multi-asset absolute return strategy seeking consistent positive returns, and hedging techniques which protect liabilities against movements arising from changes in interest rates and inflation expectations. Derivative financial instruments support both of these objectives and may lead to increased or decreased exposures to the physical asset categories disclosed below.

To provide more information on the approach used to determine and measure the fair value of the plan assets, the fair value hierarchy has been used as defined in Note 41. Those assets which cannot be classified as level 1 have been presented together as level 2 or 3.

The distribution of the fair value of the assets of the Group's funded defined benefit plans is as follows:

	Principal plan		Other		Total
	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m
Assets measured at fair value based on level 1 inputs
Derivatives	9	33	1	1	10	34
Equity securities	81	-	-	-	81	-
Interests in pooled investment funds
Debt	308	372	-	-	308	372
Equity	-	-	26	29	26	29
Property	115	62	9	20	124	82
Absolute return	60	64	109	102	169	166
Cash	297	339	36	-	333	339
Debt securities	2,494	2,841	31	32	2,525	2,873
Total assets measured at fair value based on level 1 inputs	3,364	3,711	212	184	3,576	3,895
Assets measured at fair value based on level 2 or 3 inputs
Derivatives	289	334	(6)	-	283	334
Equity securities	102	197	-	-	102	197
Interests in pooled investment funds
Debt	249	100	-	-	249	100
Debt securities	163	76	-	-	163	76
Qualifying insurance policies	5	5	64	75	69	80
Total assets measured at fair value based on level 2 or 3 inputs	808	712	58	75	866	787
Cash and cash equivalents	381	446	6	17	387	463
Liability in respect of collateral held	(300)	(339)	-	-	(300)	(339)
Other	(2)	-	-	-	(2)	-
Total	4,251	4,530	276	276	4,527	4,806

Further information on risks is provided in Section (g) of this note. The £2,688m (2017: £2,949m) of debt securities includes £2,622m (2017: £2,858m) government bonds (including conventional and index-linked). Of the remaining £66m (2017: £91m) debt securities, £42m (2017: £75m) are investment grade corporate bonds or certificates of deposit.

In 2015, the trustees of one of the Aberdeen UK plans purchased an insurance policy to protect the plan against future investment and actuarial risks. The £64m (2017: £75m) qualifying insurance asset has been calculated by valuing the estimated benefits that will be paid by the insurer using the reporting date IAS 19 assumptions and the same approach used to value the year end liabilities. The other Aberdeen UK plan has a contract in place to hedge longevity risk for pensioners. The fair value of this derivative is £nil at 31 December 2018 (2017: £nil).

(e)     Estimates and assumptions

Determination of the valuation of principal plan liabilities is a key estimate as a result of the assumptions made relating to both economic and non-economic factors.

The key economic assumptions for the principal plan, which are based in part on current market conditions, are shown below:

	2018	2017
	%	%
Discount rate	2.85	2.60
Rates of inflation
Consumer Price Index (CPI)	2.20	2.20
Retail Price Index (RPI)	3.20	3.20

The changes in economic assumptions over the period reflect changes in both corporate bond prices and market implied inflation.

The most significant non-economic assumption for the principal plan is post-retirement longevity which is inherently uncertain. The assumptions (along with sample expectations of life) are illustrated below:

				Normal Retirement Age (NRA)		Expectation of life from NRA
						Male age today				Female age today
2018	Table	Improvements				NRA			40	NRA	40
	Plan specific basis (calibrated by Club Vita) reflecting membership demographics	Advanced parameterisation of CMI 2013 mortality improvements model - adjusted to assume that improvements continue to increase in the short term before declining toward an ultimate long-term rate of 1.375%		60		30			32	32	34
					Normal Retirement Age (NRA)		Expectation of life from NRA
							Male age today			Female age today
2017	Table		Improvements				NRA	40		NRA	40
	Plan specific basis (calibrated by Club Vita) reflecting membership demographics		Advanced parameterisation of CMI 2013 mortality improvements model - adjusted to assume that improvements continue to increase in the short term before declining toward an ultimate long-term rate of 1.375%		60		30	32		31	34

These assumptions reflect a cautious allowance for the recently observed slowdown in longevity improvements.

(f)      Duration of defined benefit obligation

The graph below provides an illustration of the undiscounted expected benefit payments included in the valuation of the principal plan obligations.

Chart removed for the purposes of this announcement.  However it can be viewed in full in the pdf document.

	2018	2017
Weighted average duration	years	years
Current pensioner	14	15
Non-current pensioner	28	29

(g)     Risk

(g)(i) Risks and mitigating actions

The Group's consolidated statement of financial position is exposed to movements in the defined benefit plans' net asset. In particular, the consolidated statement of financial position could be materially sensitive to reasonably likely movements in the principal assumptions for the principal plan. By offering post-retirement defined benefit pension plans the Group is exposed to a number of risks. An explanation of the key risks and mitigating actions in place for the principal plan is given below.

Asset volatility

Investment strategy risks include underperformance of the absolute return strategy and underperformance of the liability hedging strategy. As the trustees set investment strategy to protect their own view of plan strength (not the IAS 19 position), changes in the IAS 19 liabilities (e.g. due to movements in corporate bond prices) may not always result in a similar movement in plan assets.

Failure of the asset strategy to keep pace with changes in plan liabilities would expose the plan to the risk of a deficit developing, which could increase funding requirements for the Group.

Yields/discount rate

Falls in yields would in isolation be expected to increase the defined benefit plan liabilities.

The principal plan uses both bonds and derivatives to hedge out yield risks on the plan's funding basis, rather than the IAS 19 basis, which is expected to minimise the plan's need to rely on support from the Group.

Inflation

Increases in inflation expectations would in isolation be expected to increase the defined benefit plan liabilities.

The principal plan uses both bonds and derivatives to hedge out inflation risks on the plan's funding basis, rather than the IAS 19 basis, which is expected to minimise the plan's need to rely on support from the Group.

In the principal plan pensions in payment are generally linked to CPI, however inflationary risks are hedged using RPI instruments due to lack of availability of CPI linked instruments. Therefore, the plan is exposed to movements in the actual and expected long-term gap between RPI and CPI.

Life expectancy

Increases in life expectancy beyond those currently assumed will lead to an increase in plan liabilities. Regular reviews of longevity assumptions are performed to ensure assumptions remain appropriate.

(g)(ii)      Sensitivity to key assumptions

The sensitivity of the principal plan's obligation and assets to the key assumptions is disclosed below.

			2018		20171
	Change in assumption		(Increase)/decrease in present value of obligation	Increase/(decrease) in fair value of plan assets	(Increase)/decrease in present value of obligation	Increase/(decrease) in fair value of plan assets
			£m	£m	£m	£m
Yield/discount rate	Decrease by 1% (e.g. from 2.85% to 1.85%)		(729)	1,534	(861)	1,634
	Increase by 1%		524	(1,080)	611	(1,144)
Rates of inflation	Decrease by 1%		479	(942)	539	(987)
	Increase by 1%		(683)	1,323	(772)	1,395
Life expectancy	Decrease by 1 year		73	-	56	-
	Increase by 1 year		(68)	-	(52)	-

¹    Comparatives for 2017 sensitivities have been restated to be comparable with refined 2018 methodology.

36.   Deferred income

Where the Group receives fees in advance (front-end fees) for services it is providing, including investment management services, these fees are initially recognised as a deferred income liability and released to the consolidated income statement over the period services are provided.

		2018	2017
		£m	£m
At 1 January		157	198
Reclassified as held for sale during the year		(157)	(2)
Additions during the year		78	11
Released to the consolidated income statement as fee income		(3)	(52)
Foreign exchange adjustment		-	2
At 31 December		75	157

The amount of deferred income expected to be settled after more than 12 months is £67m (2017: £115m).

37.   Other financial liabilities

		2018	2017
	Notes	£m	£m
Amounts payable on direct insurance business		-	318
Amounts payable on reinsurance contracts		-	5
Outstanding purchases of investment securities		2	194
Accruals		492	576
Creation of units awaiting settlement		168	205
Cash collateral held in respect of derivative contracts	39	21	1,501
Bank overdrafts	25	216	542
Property related liabilities		-	198
Contingent consideration liabilities	41	29	25
Other		234	332
Other financial liabilities		1,162	3,896

The amount of other financial liabilities expected to be settled after more than 12 months is £15m (2017: £141m).

Accruals includes £5m (2017: £6m) relating to contracts with customers (see note 4(b)).

38.   Provisions and other liabilities

Provisions are obligations of the Group which are of uncertain timing or amount. They are recognised when the Group has a present obligation as a result of a past event, it is probable that a loss will be incurred in settling the obligation and a reliable estimate of the amount can be made.

(a)     Provisions

The movement in provisions during the year is as follows:

	Provision for annuity sales practices	Legal provisions	Other provisions	Total provisions
2018	£m	£m	£m	£m
At 1 January	248	-	68	316
Reclassified as held for sale during the year	(248)	-	(33)	(281)
Charged/(credited) to the consolidated income statement
Additional provisions	-	-	87	87
Release of unused provision	-	-	(9)	(9)
Used during the year	-	-	(8)	(8)
At 31 December	-	-	105	105

	Provision for annuity sales practices	Legal provisions	Other provisions	Total provisions
2017	£m	£m	£m	£m
At 1 January	175	16	36	227
Charged/(credited) to the consolidated income statement
Additional provisions	100	-	58	158
Release of unused provision	-	-	(5)	(5)
Used during the year	(27)	(16)	(21)	(64)
At 31 December	248	-	68	316

Included in other provisions is a provision of £80m (2017: £nil) for separation costs expected to be incurred following the sale of the UK and European insurance business to Phoenix (the Sale). Refer Note 1 and Note 8 for further details. We announced in the Sale Circular on 30 May 2018 that we expected to incur one-off costs relating to the separation of the business sold of approximately £250m, and there has been no change to this estimate. Costs of £53m were incurred in the period to 31 December 2018. Our judgement is that a provision should be recognised for costs for which the Group will not derive ongoing benefits such as those relating to the de-coupling and decommissioning of systems and data but that a provision should not be recognised for costs related to the development of replacement systems and services as these will give future benefits. The costs covered by the provision are expected to be incurred in the three years to 2021.

The amount of provisions expected to be settled after more than 12 months is £72m (2017: £102m).

The provision for annuity sales practices related to the UK and European insurance business sold during 2018. See Note 41 for disclosures relating to the valuation of the related contingent consideration.

(b)     Other liabilities

The amount of other liabilities expected to be settled after more than 12 months is £2m (2017: £nil).

39.   Risk management 

(a)     Overview

(a)(i)       Application of the Enterprise Risk Management (ERM) framework

Effective risk management is an essential part of delivering our corporate strategy. Our approach is predicated on strong risk awareness and risk accountability across all lines of defence in our business. We believe that this delivers long-term value for our clients, customers and shareholders and protects their interests.

We aim to ensure that:

·  Our decision making is attentive to both risk and reward in pursuit of our business plan objectives and strong client outcomes

·  Our responsibilities to clients and customers are prioritised

·  Capital is appropriately rewarded for the risks that are taken

The ERM framework ensures that risk is assessed, monitored, controlled and appropriately governed based on a common taxonomy and methodology. The major components of the ERM framework can be grouped into four areas related to how we govern, assess, monitor and control risks. Most risks arise in the business (first line) and that is where they should be managed. The second line oversees business risk assessments and provides advice and challenge where necessary.

For the purposes of managing risks to the Group's financial assets and financial liabilities, the Group considers the following categories:

Risk	Definition
Market	The risk of financial loss as a result of adverse financial market movements.
Credit	The risk of financial loss as a result of the failure of a counterparty, issuer or borrower to meet their obligations or perform them in a timely manner.
Liquidity	The risk that the Group is unable to settle its financial obligations when they fall due, as a result of having insufficient liquid resources or being unable to realise investments and other assets other than at excessive costs.
Operational	The risk that people, processes, systems, or external events impede the Group's ability to meet its strategic objectives. This risk is a function of internal controls, process efficiency, employee conduct, third party oversight, physical security, integrity of data and business resiliency. Operational risk also includes the breakdown of processes to comply with laws, regulations or directives.
Conduct	The risk that through our behaviours, strategies, decisions and actions the Group delivers unfair outcomes to our customers/clients and/or poor market conduct.
Regulatory & legal	The risk of regulatory or legal sanction, reputational damage or financial consequences as a result of a failure to comply with, or adequately allow for changes in, all applicable laws and legislation, contractual requirements or regulations in any of the countries in which the Group operates.
Strategic	Risks which threaten the achievement of the strategy through poor strategic decision-making, implementation or response to changing circumstances.

There are a range of sources of risk affecting these risk categories and the principal risks and uncertainties that affect the business model are set out in detail in the Risk management section of the Strategic report.

Risk segments

The assets and liabilities on the Group's consolidated statement of financial position can be split into three categories (risk segments) which give the shareholder different exposures to the risks listed previously. These categories are:

Shareholder business

Shareholder business refers to the assets and liabilities to which the shareholder is directly exposed. For the purposes of this note, the shareholder refers to the equity holders of the Company and the preference shareholders.

Unit linked funds

Unit linked funds refers to the assets and liabilities of the unit linked funds of the life operations of the Group. It does not include the cash flows (such as asset management charges or investment expenses) arising from the unit linked fund contracts. Such cash flows are included in shareholder business.

Third party interest in consolidated funds and non-controlling interests

Third party interest in consolidated funds and non-controlling interests refers to the assets and liabilities recorded on the Group's consolidated statement of financial position which belong to third parties. The Group controls the entities which own the assets and liabilities but the Group does not own 100% of the equity or units of the relevant entities.

Prior to the sale of the UK and European insurance business the Group also had a participating business risk segment. Participating business referred to the assets and liabilities of the participating funds of SLAL.

The following table sets out the link between the reportable segments set out in Note 2 and the risk segments.

	Risk segment
Reportable segment	Shareholder business	Participating business	Unit linked funds1
Asset management and platforms	Standard Life Investments (Holdings) Ltd and all its subsidiaries Aberdeen Asset Management PLC and all its subsidiaries (excluding Aberdeen Asset Management Life and Pensions Ltd) Standard Life Aberdeen Plc  Standard Life Savings Limited (including Elevate) 1825 Financial Planning Ltd Standard Life Client Management Ltd Focus Solutions Group Ltd Standard Life (Asia) Limited (excluding unit linked funds)	n/a	Aberdeen Asset Management Life and Pensions Ltd Standard Life (Asia) Limited unit linked funds
Insurance associates and joint ventures	Interests in Indian and Chinese associates and joint ventures Interest in Phoenix	n/a	n/a
UK and European  insurance (discontinued operations)	SLAL - SHF SLAL - PBF (excluding unit linked funds) Vebnet Group SL Intl (excluding unit linked funds)	SLAL - HWPF SLAL - GWPF SLAL - GSMWPF SLAL - UKSMWPF	SLAL - PBF unit linked funds SL Intl unit linked funds
SLAL = Standard Life Assurance Limited SHF = Shareholder Fund PBF = Proprietary Business Fund SL Intl = Standard Life International Designated Activity Company		HWPF = Heritage With Profits Fund GWPF = German With Profits Fund GSMWPF = German Smoothed Managed With Profits Fund UKSMWPF = UK Smoothed Managed With Profits Fund

¹    Unit linked funds does not include cash flows arising from unit linked fund contracts or the liabilities for insurance features or financial guarantees contained within the unit linked fund contracts. Such cash flows and liabilities are included in shareholder business.

The table below sets out how the shareholder is exposed to market, credit, and liquidity risk at the reporting date, arising from the assets and liabilities of the three risk segments:

Risk	Shareholder business	Unit linked funds	Third party interests in consolidated funds and non-controlling interests (TPICF & NCI)
Market	The shareholder is directly exposed to the impact of movements in equity and property prices, interest rates and foreign exchange rates on the value of assets held by the shareholder business.	Assets are managed in accordance with the mandates of the particular funds and the financial risks associated with the assets are borne by the policyholder. The shareholder's exposure arises from the changes in the value of future fee based revenue earned on unit linked funds due to market movements.	The shareholder is not exposed to the market risk from assets in respect of TPICF & NCI since the financial risks of the assets are borne by third parties.
Credit	The shareholder is directly exposed to credit risk from holding cash, debt securities, loans and derivative financial instruments.	Assets are managed in accordance with the mandates of the particular funds and the financial risks associated with the assets are expected to be borne by the policyholder. The shareholder's exposure is limited to changes in the value of future fee based revenue earned on unit linked funds due to market movements.	The shareholder is not exposed to the credit risk from assets in respect of TPICF & NCI since the financial risks of the assets are borne by third parties.
Liquidity	The shareholder is directly exposed to the liquidity risk from the shareholder business if it is unable to realise investments and other assets in order to settle its financial obligations when they fall due, or can do so only at excessive cost.	Unit linked funds are normally expected to meet their obligations through liquidating the underlying assets in which they are invested. If a unit linked fund cannot meet its obligations in this way, the shareholder may be required to meet the obligations to the policyholder.	The shareholder is not exposed to the liquidity risk from these liabilities, since the financial risks of the obligations are borne by third parties.

Prior to the sale of the UK and European insurance business, the Group had significant direct exposure to demographic risks, in particular persistency risk and longevity risk. Following the sale, the Group's exposure to demographic risk is largely limited to its defined benefit pension plans and is no longer considered a key risk. The risks relating to the Group's defined benefit pension plans are explained in Note 35.

The shareholder is exposed to operational, conduct, regulatory and legal, and strategic risks arising across the three risk segments and any losses incurred are typically borne by the shareholder.

(a)(ii)      Consolidated financial position by risk segment

The table that follows provides an analysis of the consolidated statement of financial position showing the Group's assets and liabilities by risk segment. This categorisation has been used to present the information in this note.

Following the sale of the UK and European insurance business the Group no longer has a participating business risk segment and the financial instrument exposures in the shareholder business, unit linked funds, and third party interest in consolidated funds and non-controlling interests risk segments have significantly reduced.

	Shareholder business		Participating business		Unit linked funds		TPICF & NCI1		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Intangible assets	3,404	4,514	-	-	-	-	-	-	3,404	4,514
Deferred acquisition costs	6	581	-	31	-	-	-	-	6	612
Investments in associates and joint ventures accounted for using the equity method	1,444	503	-	-	-	-	-	-	1,444	503
Investment property	-	-	-	1,480	-	5,721	-	2,548	-	9,749
Property, plant and equipment	61	67	-	30	-	49	-	-	61	146
Pension and other post-retirement benefit assets	1,111	1,099	-	-	-	-	-	-	1,111	1,099
Deferred tax assets	61	65	-	-	-	-	-	-	61	65
Reinsurance assets	-	44	-	4,767	-	-	-	-	-	4,811
Loans	-	-	-	80	-	11	-	-	-	91
Derivative financial assets	18	21	-	1,565	2	1,164	1	303	21	3,053
Equity securities and interests in pooled investment funds at FVTPL	501	331	-	10,327	1,353	80,099	176	8,263	2,030	99,020
Debt securities
At FVTPL	708	7,781	-	26,107	80	22,191	73	4,630	861	60,709
At available-for-sale	862	856	-	-	-	-	-	-	862	856
Receivables and other financial assets	695	697	-	70	11	366	2	109	708	1,242
Current tax recoverable	6	36	-	12	-	135	-	9	6	192
Other assets	40	103	-	11	-	68	-	3	40	185
Assets held for sale	158	180	-	174	604	648	-	36	762	1,038
Cash and cash equivalents	1,110	2,433	-	1,581	26	5,037	4	1,175	1,140	10,226
Total assets	10,185	19,311	-	46,235	2,076	115,489	256	17,076	12,517	198,111
Non-participating insurance contract liabilities	3	6,068	-	8,878	-	7,794	-	-	3	22,740
Non-participating investment contract liabilities	-	4	-	-	1,468	105,765	-	-	1,468	105,769
Participating insurance contract liabilities	-	-	-	14,659	-	-	-	-	-	14,659
Participating investment contract liabilities	-	-	-	15,313	-	-	-	-	-	15,313
Unallocated divisible surplus	-	-	-	675	-	-	-	-	-	675
Deposits received from reinsurers	-	12	-	4,621	-	-	-	-	-	4,633
Third party interest in consolidated funds	-	-	-	-	-	-	254	16,457	254	16,457
Subordinated liabilities	1,081	2,253	-	-	-	-	-	-	1,081	2,253
Pension and other post-retirement benefit provisions	38	78	-	-	-	-	-	-	38	78
Deferred income	75	124	-	33	-	-	-	-	75	157
Deferred tax liabilities	100	221	-	59	-	87	-	-	100	367
Current tax liabilities	22	77	-	(3)	1	83	-	9	23	166
Derivative financial liabilities	4	46	-	64	1	556	1	147	6	813
Other financial liabilities	1,160	1,588	-	1,631	1	527	1	150	1,162	3,896
Provisions	105	295	-	21	-	-	-	-	105	316
Other liabilities	6	58	-	10	-	41	-	12	6	121
Liabilities of operations held for sale	51	59	-	-	606	641	-	6	657	706
Total liabilities	2,645	10,883	-	45,961	2,077	115,494	256	16,781	4,978	189,119
Net inter-segment assets/(liabilities)	(3)	275	-	(274)	1	5	2	(6)	-	-
Net assets2	7,537	8,703	-	-	-	-	2	289	7,539	8,992

¹    Third party interest in consolidated funds and non-controlling interests.

²    Net assets of the shareholder business comprises equity attributable to equity holders of Standard Life Aberdeen plc of £7,438m (2017: £8,604m) and equity attributable to preference shareholders of £99m (2017: £99m).

(b)     Market risk

As described in the table on page 188, the shareholder is exposed to market risk and as a result the following quantitative market risk disclosures are provided in respect of the financial assets of the shareholder business.

Quantitative market risk disclosures are not provided in respect of the assets of the unit linked funds since the shareholder is not directly exposed to market risks from these assets. The shareholder's exposure to market risk on these assets is limited to variations in the value of future fee based revenue earned on the contracts as fees are based on a percentage of the fund value. The shareholder is also not exposed to the market risk from the assets held by third party interest in consolidated funds and non-controlling interests and therefore they have been excluded from the following quantitative disclosures.

The Group manages market risks through the use of a number of controls and techniques which are discussed in the following section.

Shareholder business

Market risk exposures in the Asset management and platforms segment primarily arise as a result of holdings in newly established investment vehicles which the Group has seeded. Seed capital is classified as held for sale when it is the intention to dispose of the vehicle in a single transaction and within one year. The shareholder balance sheet includes the following amounts in respect of seed capital.

		2018	2017
Seed capital	Notes	£m	£m
Equity securities and interests in pooled investment funds at FVTPL		76	96
Debt securities		22	34
Assets held for sale	24	81	63
Total		179	193

Seed capital is typically invested in quoted funds. The Group sets limits for investing in seed capital and co-investment activity and regularly monitors exposures arising from these investments. The Group will consider hedging its exposure to market and currency risk in respect of seed capital investments where it is appropriate and efficient to do so. The Group will also consider hedging its exposure to currency risk in respect of co-investments where it is appropriate and efficient to do so. Other market risks associated with co-investments are not hedged given the need for the Group's economic interests to be aligned with those of the co-investors.

Market risk exposure also arises to the extent that the market value of assets held to back debt issued does not move in line with the market value of the liabilities being backed. This risk is controlled through having robust processes in place to limit the use of proceeds from debt issuance and includes the use of investment constraints and portfolio limits.

(b)(i) Elements of market risk

The main elements of market risk to which the Group is exposed are equity risk, interest rate risk and foreign currency risk, which are discussed on the following pages.

Information on the methods used to determine fair values for each major category of financial instrument measured at fair value is presented in Note 41.

(b)(i)(i)     Group exposure to equity risk

The Group is exposed to the risk of adverse equity market movements which could result in losses. This applies to daily changes in the market values and returns on the holdings in its equity securities portfolio. The Group's shareholders are exposed to the following sources of equity risk:

·  Direct equity shareholdings in the shareholder business and the Group's defined benefit pension plans

·  The indirect impact from changes in the value of equities held in funds from which management charges are taken

Exposures to equity securities are primarily controlled through the limits imposed on the amount of seed capital and co-investment activity that may be undertaken.

The table below shows the direct shareholder businesses' exposure to equity markets. Equity securities are analysed by country based on the ultimate parent country of risk.

			Shareholder business
			2018	2017
			£m	£m
UK			24	50
Belgium			-	1
Denmark			-	2
Finland			-	1
France			-	8
Germany			-	7
Ireland			-	1
Italy			-	5
Japan			-	1
Malaysia			3	2
Netherlands			-	4
Russia			-	1
Spain			-	6
Sweden			-	2
Switzerland			-	4
Taiwan			7	2
US			-	11
Other			3	19
Total			37	127

In addition to the equity securities analysed above, the shareholder business has interests in pooled investment funds of £464m (2017: £204m). The shareholder exposure to interests in pooled investment funds primarily relates to:

·  Co-investment holdings in property and infrastructure funds of £37m (2017: £56m)

·  Investments in certain Aberdeen managed funds to hedge against liabilities from variable pay awards that are deferred and settled in cash by reference to the share price of those funds of £53m (2017: £57m)

·  Seed capital in funds which are not consolidated of £57m (2017: £73m)

·  Holdings in cash funds which are not consolidated of £30m (2017: £5m)

·  Corporate funds held in absolute return funds which are not consolidated of £252m (2017: £nil)

(b)(i)(ii) Group exposure to interest rate risk

Interest rate risk is the risk that arises from exposures to changes in the shape and level of yield curves which could result in losses due to the value of financial assets and liabilities, or the cash flows relating to these, fluctuating by different amounts.

The main financial assets held by the Group which give rise to interest rate risk are debt securities and cash and cash equivalents. The main financial liabilities giving rise to interest rate risk principally comprise subordinated liabilities. Derivative financial instruments held by the Group also give rise to interest rate risk.

Shareholder business

Under the Group's ERM framework, Group companies are required to manage their interest rate exposures in line with the Group's Board's risk appetite. Group companies typically use a combination of cash flow and duration matching techniques to manage their interest rate risk at an entity level.

The sensitivity of profit after tax to changes in interest rates for the shareholder business is included in the profit after tax sensitivity to market risk table, shown in Section (b)(ii).

(b)(i)(iii) Group exposure to foreign currency risk

The Group's financial assets are generally held in the local currency of its operational geographic locations, principally to assist with the matching of liabilities. However, foreign currency risk arises where adverse movements in currency exchange rates impact the value of revenues received from, and the value of assets and liabilities held in, currencies other than the local currency. The Group manages this risk through the use of limits on the amount of foreign currency risk that is permitted.

The table below summarise the shareholder businesses' exposure to foreign currency risks in Sterling. The table exclude inter-segment assets and liabilities.

Shareholder business

	UK Sterling		Euro		Canadian Dollar		Hong Kong Dollar		US Dollar		Indian Rupee		Singapore Dollar		Other currencies		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Total assets	8,520	16,353	218	1,175	10	8	74	74	407	722	438	396	120	154	398	429	10,185	19,311
Total liabilities	(1,825)	(9,186)	(40)	(547)	-	-	(38)	(41)	(677)	(1,007)	-	-	(31)	(19)	(34)	(83)	(2,645)	(10,883)
Net investment hedges	6	6	-	-	-	-	(6)	(6)	-	-	-	-	-	-	-	-	-	-
Cash flow hedges	(589)	(567)	-	8	-	-	-	-	589	559	-	-	-	-	-	-	-	-
Non designated derivatives	108	255	(26)	(146)	-	(5)	-	(1)	(68)	(119)	-	18	-	(3)	(14)	1	-	-
	6,220	6,861	152	490	10	3	30	26	251	155	438	414	89	132	350	347	7,540	8,428

Other currencies include assets of £13m (2017: £5m) and liabilities of £3m (2017: £36m) in relation to the fair value of derivatives used to manage currency risk.

The principal source of foreign currency risk for shareholders arises from the Group's investments in overseas subsidiaries, joint ventures and associates accounted for using the equity method. On 18 October 2017, the Group issued US dollar subordinated notes with a principal amount of US$750m. The related cash flows expose the Group to foreign currency risk on the principal and coupons payable. The Group manages the foreign exchange risk with a cross-currency swap which is designated as a cash flow hedge.

Non designated derivatives relate to foreign exchange forward contracts that are not designated as cash flow hedges or net investment hedges.

During 2018 the Group reaffirmed its strategy for hedging foreign currency risks, providing a consistent approach to managing these risks. The Group generally does not hedge the currency exposure relating to revenue and expenditure, nor does it hedge translation of overseas profits in the income statement. Where appropriate, the Group may use derivative contracts to reduce or eliminate currency risk arising from individual transactions or seed capital and co-investment activity.

(b)(ii)      Sensitivity of financial instruments to market risk analysis

The Group's profit after tax and equity are sensitive to variations in respect of the Group's market risk exposures and a sensitivity analysis is presented below. The analysis has been performed by calculating the sensitivity of profit after tax and equity to changes in equity security prices (price risk) and to changes in interest rates (interest rate risk) as at the reporting date applied to assets and liabilities other than those classified as held for sale. There is no impact in 2018 on profit after tax to changes in property prices.

Unit linked funds

Changes in equity security and property prices and/or fluctuations in interest rates will affect unit linked liabilities and the associated assets by the same amount. Therefore, the change in unit linked liabilities and the corresponding asset movement has not been presented.

Limitations

The sensitivity of the Group's profit after tax and equity is non-linear and larger or smaller impacts should not be derived from these results.

The sensitivity analysis represents the impact on profit at year end that the changes in market conditions can have. The sensitivity will vary with time, both due to changes in market conditions and changes in the actual asset mix, and this mix is being actively managed. The results of the sensitivity analysis may also have been different from those illustrated had the sensitivity factors been applied at a date other than the reporting date.

For each sensitivity 'test', the impact of a reasonably possible change in a single sensitivity factor is presented, while the other sensitivity factors remain unchanged. Correlations between the different risks and/or other factors may mean that experience would differ from that expected if more than one risk event occurred simultaneously.

These sensitivities concern only the impact on financial instruments and exclude indirect impacts of the variable on fee income and certain costs which may be affected by the changes in market conditions.

Profit after tax and equity sensitivity to price risk.

The impact of the following price risk assumptions on profit and equity, net of tax, are as follows:

	Impact on profit after tax1 and on equity
	2018	2017
	£m	£m
Change in equity security prices
+10%	16	13
-10%	(16)	(13)
+20%	32	26
-20%	(32)	(26)

¹    A positive number for impact on profit after tax represents a credit to the consolidated income statement.

The sensitivity of the Group's total equity to variations in equity securities prices is the same as the sensitivity of the Group's profit after tax.

Profit after tax and equity sensitivity to interest rate risk.

The impact of the following interest rate assumptions on profit and equity, net of tax, are as follows:

	Impact on profit after tax1		Impact on equity
	2018	2017	2018	2017
	£m	£m	£m	£m
Change in interest rates
+1%2	7	(24)	(4)	(31)
-1%2	(7)	28	4	33

¹    A positive number for impact on profit after tax represents a credit to the consolidated income statement.

²    The interest rate sensitivity is a parallel shift subject to a floor of -30bps.

The impact of interest rate changes on profit after tax in 2018 primarily relates to cash and cash equivalents, while the impact in 2017 primarily relates to assets and insurance contract liabilities of the UK and European insurance business.

The Group's financial instruments include certain debt securities classified as available-for-sale. These debt securities are measured at fair value. Interest is calculated using the effective interest method and recognised in the consolidated income statement. Other changes in fair value and the related tax are recognised in other comprehensive income. As a result, the sensitivity of the Group's equity to variations in interest rate risk exposures differs from the sensitivity of the Group's profit after tax to variations in interest rate risk exposures.

(c)     Credit risk

As described in the table on page 188, the shareholder is exposed to credit risk and as a result the following quantitative credit risk disclosures are provided in respect of the financial assets held.

Quantitative credit risk disclosures are not provided in respect of the assets of the unit linked funds since the shareholder is not directly exposed to credit risk from these assets.

The shareholder is also not exposed to the credit risk from the assets held by third party interest in consolidated funds and non-controlling interests and therefore these have been excluded from the following quantitative disclosures.

The Group's credit risk exposure mainly arises from its holdings in financial instruments. Exposures to credit risk and concentrations of credit risk are managed by setting exposure limits for different types of financial instruments and counterparties. The limits are established using the following controls:

Financial instrument with credit risk exposure	Control
Cash and cash equivalents	Maximum counterparty exposure limits are set with reference to internal credit assessments.
Derivative financial instruments	Maximum counterparty exposure limits, net of collateral, are set with reference to internal credit assessments. The forms of collateral that may be accepted are also specified and minimum transfer amounts in respect of collateral transfers are documented. Refer to Section (c)(ii) for further details on collateral.
Debt securities	The Group's policy is to set exposure limits by name of issuer, sector and credit rating.
Other financial instruments	Appropriate limits are set for other financial instruments to which the Group may have exposure at certain times, for example commission terms paid to intermediaries.

Individual business units are responsible for implementing processes to ensure that credit exposures are managed within any limits that have been established. Group Treasury perform central monitoring of exposures against limits and are responsible for the escalation of any limit breaches to the Chief Risk Officer.

The tables that follow provide an analysis of the quality of financial assets that are neither past due nor impaired at the reporting date and are exposed to credit risk. For those financial assets with credit ratings assigned by external rating agencies, classification is within the range of AAA to BBB. AAA is the highest possible rating and rated financial assets that fall outside the range of AAA to BBB have been classified as below BBB with rules followed for determining the credit rating to be disclosed when different credit ratings are assigned by different external rating agencies. For those financial assets that do not have credit ratings assigned by external rating agencies but where the Group has assigned internal ratings for use in managing and monitoring credit risk, the assets have been classified in the analysis that follows as 'internally rated'. If a financial asset is neither rated by an external agency nor 'internally rated', it is classified as 'not rated'. The total amounts presented represent the Group's maximum exposure to credit risk at the reporting date without taking into account any collateral held. The analysis also provides information on the concentration of credit risk.

(c)(i) Credit exposure

Assets are deemed to be past due when a counterparty has failed to make a payment when contractually due.

The objective evidence that is taken into account in determining whether any impairment of debt securities has occurred includes:

·  A default against the terms of the instrument has occurred

·  The issuer is subject to bankruptcy proceedings or is seeking protection from creditors through bankruptcy, individual voluntary arrangements or similar process

The following tables show the shareholder businesses' exposure to credit risk from financial assets analysed by credit rating and country.

Shareholder business

An analysis of financial and reinsurance assets by credit rating is as follows:

	Reinsurance assets		Loans		Derivative financial assets		Debt securities		Receivables and other financial assets		Cash and cash equivalents		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Neither past due nor impaired:
AAA	-	-	-	-	-	-	36	475	-	-	162	612	198	1,087
AA	-	30	-	-	-	-	262	1,719	-	-	567	947	829	2,696
A	-	14	-	-	12	10	1,121	3,782	-	-	350	849	1,483	4,655
BBB	-	-	-	-	-	1	113	1,271	-	-	20	22	133	1,294
Below BBB	-	-	-	-	-	-	16	155	-	-	3	1	19	156
Not rated	-	-	-	-	6	10	22	51	669	673	8	2	705	736
Internally rated	-	-	-	-	-	-	-	1,184	-	-	-	-	-	1,184
Past due	-	-	-	-	-	-	-	-	26	24	-	-	26	24
Impaired	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Total	-	44	-	-	18	21	1,570	8,637	695	697	1,110	2,433	3,393	11,832

At 31 December 2018, receivables and other financial assets of £21m (2017: £19m) were past due by less than three months and £1m (2017: £2m) were past due by three to six months and £4m (2017: £3m) were past due by six to twelve months.

An analysis of debt securities by country based on the ultimate parent country of risk is as follows:

	Government, provincial and municipal1		Banks		Other financial institutions		Other corporate		Other2		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
UK	13	495	13	429	35	1,206	93	1,791	14	10	168	3,931
Australia	-	-	10	126	-	17	-	14	-	-	10	157
Austria	-	29	-	-	-	-	-	-	-	-	-	29
Belgium	-	3	-	1	-	-	-	43	-	-	-	47
Canada	-	-	25	151	-	-	-	-	-	-	25	151
Denmark	-	-	45	103	-	-	-	17	-	-	45	120
France	-	192	459	507	-	4	17	272	-	-	476	975
Germany	-	11	115	67	-	1	19	312	-	-	134	391
Ireland	-	-	-	-	-	-	-	6	-	-	-	6
Italy	-	-	-	29	-	-	-	86	-	-	-	115
Japan	-	-	50	90	-	-	-	25	-	-	50	115
Mexico	-	3	-	-	-	-	6	105	-	-	6	108
Netherlands	-	22	337	294	-	-	-	107	-	-	337	423
Norway	-	-	-	-	-	-	-	42	-	-	-	42
Russia	-	3	-	-	-	-	-	-	-	-	-	3
Spain	-	-	25	176	-	-	2	71	-	-	27	247
Sweden	-	-	63	121	-	1	-	8	-	-	63	130
Switzerland	-	-	-	78	-	-	-	1	-	-	-	79
US	-	25	50	182	15	102	10	440	-	-	75	749
Other	-	66	115	275	-	114	8	151	31	213	154	819
Total	13	849	1,307	2,629	50	1,445	155	3,491	45	223	1,570	8,637

¹    Government, provincial and municipal includes debt securities which are issued by or explicitly guaranteed by the national government.

²    This balance primarily consists of securities held in supranationals.

 (c)(ii)      Collateral accepted and pledged in respect of financial instruments

Collateral in respect of bilateral over-the-counter (OTC) derivative financial instruments and bilateral repurchase agreements is accepted from and provided to certain market counterparties to mitigate counterparty risk in the event of default. The use of collateral in respect of these instruments is governed by formal bilateral agreements between the parties. For OTC derivatives the amount of collateral required by either party is determined by the daily bilateral OTC exposure calculations in accordance with these agreements and collateral is moved on a daily basis to ensure there is full collateralisation. Under the terms of these agreements, collateral is posted with the ownership captured under title transfer of the contract. With regard to either collateral pledged or accepted, the Group may request the return of, or be required to return, collateral to the extent it differs from that required under the daily bilateral OTC exposure calculations.

Where there is an event of default under the terms of the agreements, any collateral balances will be included in the close-out calculation of
net counterparty exposure. At 31 December 2018, the Group had pledged £8m (2017: £46m) of cash and £nil (2017: £103m) of securities
as collateral for derivative financial liabilities. At 31 December 2018, the Group had accepted £21m (2017: £1,501m) of cash and £50m
(2017: £947m) of securities as collateral for derivatives financial assets and reverse repurchase agreements. None of the securities were sold or repledged at the year end. 

(c)(iii)      Offsetting financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported on the consolidated statement of financial position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Other than cash and cash equivalents disclosed in Note 25, the Group does not offset financial assets and liabilities on the consolidated statement of financial position, as there are no unconditional rights to set off. Consequently, the gross amount of other financial instruments presented on the consolidated statement of financial position is the net amount. The Group's bilateral OTC derivatives are all subject to an International Swaps and Derivative Association (ISDA) master agreement. ISDA master agreements and reverse repurchase agreements entered into by the Group are considered master netting agreements as they provide a right of set off that is enforceable only in the event of default, insolvency, or bankruptcy.

The Group does not hold any other financial instruments which are subject to master netting agreements or similar arrangements.

The following table presents the effect of master netting agreements and similar arrangements.

		Related amounts not offset on the consolidated statement of financial position
	Gross amounts of financial instruments as presented on the consolidated statement of financial position	Financial instruments	Financial collateral pledged/(received)	Net position
As at 31 December 2018	£m	£m	£m	£m
Financial assets
Derivatives1	20	(1)	(14)	5
Reverse repurchase agreements	50	-	(50)	-
Total financial assets	70	(1)	(64)	5
Financial liabilities
Derivatives1	(5)	1	3	(1)
Total financial liabilities	(5)	1	3	(1)

		Related amounts not offset on the consolidated statement of financial position
	Gross amounts of financial instruments as presented on the consolidated statement of financial position	Financial instruments	Financial collateral pledged/(received)	Net position
As at 31 December 2017	£m	£m	£m	£m
Financial assets
Derivatives1	2,043	(465)	(1,508)	70
Reverse repurchase agreements	900	-	(899)	1
Total financial assets	2,943	(465)	(2,407)	71
Financial liabilities
Derivatives1	(647)	465	95	(87)
Total financial liabilities	(647)	465	95	(87)

¹    Only OTC derivatives subject to master netting agreements have been included above.

(c)(iv)      Credit risk on financial liabilities designated as at fair value through profit or loss

The Group has designated unit linked non-participating investment contract liabilities as at FVTPL. As the fair value of the liability is based on the value of the underlying portfolio of assets, the movement, during the period and cumulatively, in the fair value of the unit linked non-participating investment contract liabilities, is only attributable to market risk.

(d)     Liquidity risk

As described in the table on page 188, the shareholder is exposed to liquidity risk from shareholder business and unit linked funds and, as a result, the following quantitative liquidity risk disclosures are provided in respect of the financial liabilities of these categories.

The shareholder is not exposed to the liquidity risk from the assets held by third party interests in consolidated funds and non-controlling interests and therefore these have been excluded from the following quantitative disclosures.

Business units employ risk management techniques relevant to their product types with the objective of mitigating exposures to liquidity risk. For the unit linked business, liquidity risk is primarily managed by holding a range of diversified instruments which are assessed against estimated cash flow and funding requirements.

For non-participating unit linked contracts, a core portfolio of assets is maintained and invested in accordance with the mandates of the relevant unit linked funds. Policyholder behaviour and the trading position of asset classes are actively monitored. The unit price and value of any associated contracts would reflect the proceeds of any sales of assets. If considered necessary, deferral terms within the policy conditions applying to the majority of the Group's contracts are invoked.

Periodic investigations are undertaken into liquidity requirements, which include consideration of cash flows in normal conditions, as well as investigation of scenarios where cash flows differ markedly from those expected.

All business units are required to monitor, assess, manage and control liquidity risk in accordance with the relevant principles within the Group's policy framework. Oversight is provided both at a Group level and within the business unit. In addition, all business units benefit from membership of a Group to the extent that, centrally, the Group:

·  Coordinates strategic planning and funding requirements

·  Monitors and manages risk, capital requirements and available capital on a group-wide basis

·  Maintains a portfolio of committed bank facilities

The Group's committed bank facilities are currently undrawn.

Liquidity risk is managed by each business unit in consultation with the Group Treasury function and each business unit is responsible for the definition and management of its contingency funding plan.

As a result of the policies and processes established to manage risk, the Group expects to be able to manage liquidity risk on an ongoing basis. We recognise there are a number of scenarios that can impact the liquid resources of a business as discussed in the Risk management section of the Strategic report.

(d)(i) Maturity analysis

The analysis that follows presents the undiscounted cash flows payable by remaining contractual maturity at the reporting date for all financial liabilities, including non-participating investment contract liabilities. Given that unit linked policyholders can usually choose to surrender, in part or in full, their unit linked contracts at any time, the non-participating investment contract unit linked liabilities presented in the table below have been designated as payable within one year. Such surrenders would be matched in practice, if necessary, by sales of underlying assets. The Group can delay settling liabilities to unit linked policyholders to ensure fairness between those remaining in the fund and those leaving the fund. The length of any such delay is dependent on the underlying financial assets. In this analysis, the maturity within one year includes liabilities that are repayable on demand. Comparatives exclude financial liabilities of the participating business.

	Within 1 year		2-5 years		6-10 years		11-15 years		16-20 years		Greater than 20 years		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Shareholder business
Non-participating investment contract liabilities	-	4	-	-	-	-	-	-	-	-	-	-	-	4
Subordinated liabilities	53	486	210	390	845	461	144	422	144	422	615	1,493	2,011	3,674
Other financial liabilities	1,141	1,822	2	16	-	-	-	-	-	-	-	-	1,143	1,838
Total shareholder business	1,194	2,312	212	406	845	461	144	422	144	422	615	1,493	3,154	5,516
Unit linked funds
Non-participating investment contract liabilities	1,468	105,765	-	-	-	-	-	-	-	-	-	-	1,468	105,765
Other financial liabilities	1	382	-	9	-	8	-	8	-	8	-	118	1	533
Total unit linked funds	1,469	106,147	-	9	-	8	-	8	-	8	-	118	1,469	106,298
Total	2,663	108,459	212	415	845	469	144	430	144	430	615	1,611	4,623	111,814

The principal amounts of financial liabilities where the counterparty has no right to repayment are excluded from the above analysis along with interest payments on such instruments after 20 years.

Refer Note 21 for the maturity profile of undiscounted cash flows of derivative financial instruments.

The Group also had unrecognised commitments in respect of financial instruments as at 31 December 2018 with a contractual maturity of within one year and between one and five years of £9m and £28m respectively (2017: £411m and £36m).

(e)     Operational risk

The Group defines operational risk as the risk that people, processes, systems, or external events impede the Group's ability to meet its strategic objectives.

The Group conduct and operational risk policy framework is used to support the management of operational risks. Business units adopt the relevant minimum standards contained within these policies and are required to manage risk in accordance with the policies, taking mitigating action as appropriate to operate within appetites.

The types of operational risk to which the Group is exposed are identified using the following operational risk categories:

·  Process execution and trade errors

·  People

·  Technology

·  Business resilience and continuity

·  Fraud and financial crime

·  Change management

·  Supplier risk

·  Financial management process

Activities undertaken to ensure the practical operation of controls over financial risks, that is, market, credit and liquidity, are treated as an operational risk.

Operational risk exposures are controlled using one or a combination of the following: modifying operations to mitigate the exposure to the risk; accepting exposure to the risk; or accepting exposure to the risk and controlling the exposure by risk transfer or risk treatment. The factors on which the level of control and nature of the controls implemented are based include:

·  The potential cause and impact of the risk

·  The likelihood of the risk being realised in the absence of any controls

·  The ease with which the risk could be insured against

·  The cost of implementing controls to reduce the likelihood of the risk being realised

·  Operational risk appetite

Risk Control Self Assessment (RCSA) is a monitoring activity where business managers assess the operation of the controls for which they are responsible and the adequacy of these controls to manage key operational risks and associated business processes. The assessment completed by business managers is validated and challenged on a risk basis by the Risk and Compliance function in its role of 'second line of defence'. Independent assurance as to the effectiveness of the RCSA process is provided by Group Internal Audit in its role of 'third line of defence'. The results of RCSA are reported through the risk governance structure. 

The assessment of operational risk exposures is performed on a qualitative basis using a combination of impact and likelihood, and on a quantitative basis using objective and verifiable measures. The maximum amount of operational risk the Group is willing to tolerate is defined using risk appetite statements and Board approved tolerances.

The operational risks faced by each business unit and its exposure to these risks forms its operational risk profile. Each business unit is required to understand and review its profile based on a combination of the estimated impact and likelihood of risk events occurring in the future, the results of RCSA and a review of risk exposures relative to approved limits. 

The impact of a new product, a significant change, or any one-off transaction on the operational risk profile of each business unit is assessed and managed in accordance with established guidelines or standards.

 (f)     Conduct risk

The Group defines conduct risk as the risk that through our behaviours, strategies, decisions and actions the Group delivers unfair outcomes to our customers/clients and/or poor market conduct. Conduct risk can occur across multiple areas and from multiple sources, including the crystallisation of an operational risk.

The Group has a single conduct and operational risk framework that utilises the tools, such as RCSAs, outlined under operational risk (e) to ensure the appropriate identification and management of conduct risk. Business units adopt the relevant minimum standards contained within the conduct risk policy and are required to manage risk in accordance with this and other policies that have an impact on the overall conduct risk, taking mitigating action as appropriate to operate within appetites.

The following conduct risk policy standards have defined outcomes against which conduct risk is assessed within the Group:

·  Culture

·  Proposition design

·  Communication and information

·  Advice and distribution

·  Service

·  Barriers

·  Proposition performance

·  Market integrity

(g)     Regulatory and legal risk

The Group defines regulatory and legal risk as the risk of regulatory or legal sanction, reputational damage or financial consequences as a result of a failure to comply with, or adequately allow for changes in, all applicable laws and legislation, contractual requirements or regulations in any of the countries in which the Group operates.

Business units must have in place procedures to identify, report and analyse all regulatory compliance breaches to the relevant business unit compliance function. Additionally, business units are required to have procedures in place to identify, assess and monitor the impact of changes to laws, regulations and rules, prescribed practices and external regulatory events in jurisdictions where they choose to carry on regulated financial services activity.

(h)     Strategic risk

The Group defines strategic risk as those risks which threaten the achievement of the strategy through poor strategic decision-making, implementation or response to changing circumstances. Strategic risks are considered across the Group through the business planning process. The strategic risks to which the Group is exposed are reviewed on a regular basis.

40.   Structured entities

A structured entity is an entity that is structured in such a way that voting or similar rights are not the dominant factor in deciding who controls the entity. The Group has interests in structured entities through investments in a range of investment vehicles including:

·  Pooled investment funds managed internally and externally, including OEICs, SICAVs, unit trusts and limited partnerships

·  Debt securitisation vehicles which issue asset-backed securities

The Group consolidates structured entities which it controls. Where the Group has an investment in, but not control over these types of entities, the investment is classified as an investment in associate when the Group has significant influence.

The Group also has interests in structured entities through asset management fees and other fees received from these entities.

(a)     Consolidated structured entities

As at 31 December 2018 and 31 December 2017, the Group has not provided any non-contractual financial or other support to any consolidated structured entity and there are no current intentions to do so.

(b)     Unconsolidated structured entities

As at 31 December 2018 and 31 December 2017, the Group has not provided any non-contractual financial or other support to any unconsolidated structured entities and there are no current intentions to do so.

(b)(i) Investments in unconsolidated structured entities

The following table shows the carrying value of the Group's investments in unconsolidated structured entities by line item in the consolidated statement of financial position and by risk segment as defined in Note 39.

	Shareholder business		Participating business		Unit linked funds		TPICF & NCI1		Total
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equity securities and interests in pooled investment funds	451	202	-	806	138	32,229	86	3,484	675	36,721
Debt securities	13	682	-	1,468	-	945	-	138	13	3,233
Total	464	884	-	2,274	138	33,174	86	3,622	688	39,954

¹    Third party interest in consolidated funds and non-controlling interests.

Equity securities and interests in pooled investment funds includes £610m (2017: £11,146m) of unconsolidated structured entities which are managed by the Group and in which the Group has a direct investment of which £34m (2017: £5,936m) relates to investments in associates measured at FVTPL. The asset value of these unconsolidated structured entities, net of cross holdings, is £21,020m (2017: £62,741m) of which £20m (2017: £19,219m) relates to investments in associates measured at FVTPL. The total fees recognised in respect of these assets under management during the year to 31 December 2018 were £44m (2017: £254m) of which £nil (2017: £31m) relates to structured entities where the Group's holding is classified as an investment in an associate measured at FVTPL.

The total issuance balance relating to unconsolidated structured debt securitisation vehicles in which the Group has an investment is £1,000m (2017: £59,169m).

The Group's maximum exposure to loss in respect of its investments in unconsolidated structured entities is the carrying value of the Group's investment and, where the structured entity is managed by the Group, loss of future fees. As noted in Note 39, the shareholder is not exposed to market or credit risk in respect of investments held in the unit linked funds, and third party interest in consolidated funds and non-controlling interests risk segments.

Additional information on how the Group manages its exposure to risk can be found in Note 39.

(b)(ii) Other interests in unconsolidated structured entities

For those structured entities which the Group receives asset management or other fees from but has no direct investment, the maximum exposure to loss is loss of future fees.

Total assets under management of structured entities in which the Group has no direct investments but has other interests in are £136,047m at 31 December 2018 (2017: £80,454m). The fees recognised in respect of these assets under management during the year to 31 December 2018 were £813m (2017: £305m).

41.   Fair value of assets and liabilities

The Group uses fair value to measure many of its assets and liabilities. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction.

 

Estimates and assumptions

Determination of the fair value of contingent consideration assets and liabilities is a key estimate. Further details on the methods and assumptions used to value these assets and liabilities, and sensitivities to those assumptions, are set out in Section (d) below.

(a)     Determination of fair value hierarchy

To provide further information on the approach used to determine and measure the fair value of certain assets and liabilities, the following fair value hierarchy categorisation has been used:

·  Level 1: Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market exists where transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

·  Level 2: Fair values measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

·  Level 3: Fair values measured using inputs that are not based on observable market data (unobservable inputs)

(b)     Financial investments and financial liabilities

An analysis of the Group's financial investments and financial liabilities in accordance with the categories of financial instrument set out in IAS 39 Financial Instruments: Recognition and Measurement is presented in Notes 19 and 33 and includes those financial assets and liabilities held at fair value.

(c)     Non-financial investments

An analysis of the Group's investment property and owner occupied property within property, plant and equipment in accordance with IAS 40 Investment property and IAS 16 Property, plant and equipment is presented in Notes 17 and 18 respectively and includes those assets held at fair value.

(d)     Methods and assumptions used to determine fair value of assets and liabilities including those held for sale

Information on the methods and assumptions used to determine fair values for each major category of instrument measured at fair value is given below. These methods and assumptions include those used to fair value assets and liabilities held for sale, including the individual assets and liabilities of operations held for sale.

Investments in associates at FVTPL, equity securities and interests in pooled investment funds and amounts seeded into funds classified as held for sale

Investments in associates at FVTPL are valued in the same manner as the Group's equity securities and interests in pooled investment funds. 

Equity instruments listed on a recognised exchange are valued using prices sourced from the primary exchange on which they are listed. These instruments are generally considered to be quoted in an active market and are therefore categorised as level 1 instruments within the fair value hierarchy.

Unlisted equities are valued using an adjusted net asset value. The Group's exposure to unlisted equity securities primarily relates to private equity investments, real estate funds and infrastructure funds. The majority of the Group's private equity investments are carried out through European fund of funds structures, where the Group receives valuations from the investment managers of the underlying funds.

The valuations received from investment managers of the underlying funds are reviewed and where appropriate adjustments are made to reflect the impact of changes in market conditions between the date of the valuation and the end of the reporting period. The fair value of infrastructure funds is based on the phase of individual projects forming the overall investment and discounted cash flow techniques based on project earnings. The fair value of real estate funds is based on valuations provided by independent professional valuers. The valuation of these securities is therefore largely based on inputs that are not based on observable market data, and accordingly these instruments are categorised as level 3 instruments within the fair value hierarchy. Where appropriate, reference is made to observable market data.

Where pooled investment funds have been seeded and the investment in the funds have been classified as held for sale, the costs to sell are assumed to be negligible. The fair value of pooled investment funds including those held for sale is calculated as equal to the observable unit price.

Investment property and owner occupied property

The fair value of investment property and all owner occupied property is based on valuations provided by external property valuation experts. The fair value of investment property is measured based on each property's highest and best use from a market participant's perspective and considers the potential uses of the property that are physically possible, legally permissible and financially feasible. No adjustment has been made for vacant possession for the Group's owner occupied property.

In the UK and Europe, valuations are completed in accordance with the Royal Institution of Chartered Surveyors (RICS) valuation standards. These are predominantly produced using an income capitalisation approach. The income capitalisation approach is based on capitalising an annual net income stream using an appropriate yield. The annual net income is based on both current and estimated future net income. The yield and future net income used is determined by considering recent transactions involving property with similar characteristics to the property being valued. Where it is not possible to use an income capitalisation approach, for example on property with no rental income, a market comparison approach is used by considering recent transactions involving property with similar characteristics to the property being valued. In both approaches where appropriate, adjustments will be made by the valuer to reflect differences between the characteristics of the property being valued and the recent market transactions considered.

As income capitalisation and market comparison valuations generally include significant unobservable inputs including unobservable adjustments to recent market transactions, these assets are categorised as level 3 within the fair value hierarchy. 

Derivative financial assets and derivative financial liabilities

The majority of the Group's derivatives are over-the-counter derivatives which are measured at fair value using a range of valuation models including discounting future cash flows and option valuation techniques. The inputs are observable market data and over-the-counter derivatives are therefore categorised as level 2 in the fair value hierarchy.

Exchange traded derivatives are valued using prices sourced from the relevant exchange. They are considered to be instruments quoted in an active market and are therefore categorised as level 1 instruments within the fair value hierarchy.

Non-performance risk arising from the credit risk of each counterparty has been considered on a net exposure basis in line with the Group's risk management policies. At 31 December 2018 and 31 December 2017, the residual credit risk is considered immaterial and no credit risk adjustment has been made.

Debt securities

For debt securities, the Group has determined a hierarchy of pricing sources. The hierarchy consists of reputable external pricing providers who generally use observable market data. If prices are not available from these providers or are considered to be stale, the Group has established procedures to arrive at an internal assessment of the fair value. These procedures are based largely on inputs that are not based on observable market data. A further analysis by category of debt security is as follows:

·  Government, including provincial and municipal, and supranational institution bonds

These instruments are valued using prices received from external pricing providers who generally base the price on quotes received from a number of market participants. They are categorised as level 1 or level 2 instruments within the fair value hierarchy depending upon the nature of the underlying pricing information used for valuation purposes.

·  Corporate bonds listed or quoted in an established over-the-counter market including asset-backed securities

These instruments are generally valued using prices received from external pricing providers who generally consolidate quotes received from a panel of banks into a composite price. As the market becomes less active the quotes provided by some banks may be based on modelled prices rather than on actual transactions. These sources are based largely on observable market data, and therefore these instruments are categorised as level 2 instruments within the fair value hierarchy. When prices received from external pricing providers are based on a single broker indicative quote, the instruments are categorised as level 3 instruments.

For instruments for which prices are either not available from external pricing providers or the prices provided are considered to be stale, the Group performs its own assessment of the fair value of these instruments. This assessment is largely based on inputs that are not based on observable market data, principally single broker indicative quotes, and accordingly these instruments are categorised as level 3 instruments within the fair value hierarchy.

·  Other corporate bonds including unquoted bonds, commercial paper and certificates of deposit

These instruments are valued using models. For unquoted bonds the model uses inputs from comparable bonds and includes credit spreads which are obtained from brokers or estimated internally. Commercial paper and certificates of deposit are valued using standard valuation formulas. The categorisation of these instruments within the fair value hierarchy will be either level 2 or 3 depending upon the nature of the underlying pricing information used for valuation purposes.

·  Commercial mortgages

These instruments are valued using models. The models use a discount rate adjustment technique which is an income approach. The key inputs for the valuation models are contractual future cash flows, which are discounted using a discount rate that is determined by adding a spread to the current base rate. The spread is derived from a pricing matrix which incorporates data on current spreads for similar assets and which may include an internal underwriting rating. These inputs are generally observable with the exception of the spread adjustment arising from the internal underwriting rating. The classification of these instruments within the fair value hierarchy will be either level 2 or 3 depending on whether the spread is adjusted by an internal underwriting rating.

·  Income strips

Income strips are transactions where an owner-occupier of a property has sold a freehold or long leasehold interest to the Group, and has signed a long lease (typically 30-45 years) or a ground lease (typically 45-175 years) and retains the right to repurchase the property at the end of the lease for a nominal sum (usually £1).

The valuation technique used by the Group to value these instruments is an income capitalisation approach, where the annual rental income is capitalised using an appropriate yield. The yield is determined by considering recent transactions involving similar income strips. Unlike, investment properties which typically are leased on shorter lease terms, the estimated rental value is not a significant unobservable input. This is due to the length of the lease together with the nature of the rent reviews where the annual rental increases over the term of the lease in line with inflation or fixed increases. As the income capitalisation valuations generally include significant unobservable inputs including unobservable adjustments to the yield observed in other income strip transactions, these assets are categorised as level 3 in the fair value hierarchy.

Contingent consideration assets and contingent consideration liabilities                                                                            

Contingent consideration assets and liabilities have been recognised in respect of acquisitions and disposals. Generally valuations are based on unobservable assumptions regarding the probability weighted cash flows and, where relevant, discount rate and therefore the assets and liabilities are classified as level 3 in the fair value hierarchy. Significant contingent consideration arises under the terms of the sale of SLAL to Phoenix in August 2018. The terms include a number of indemnities that give rise to contingent consideration. The indemnities that have the most significant impact on the fair value of this contingent consideration are as follows:

Annuity sales practices: The annuity sales practices indemnity primarily relates to enhanced annuities. At the request of the FCA, SLAL is conducting a review of non-advised annuity sales (with a purchase price above a minimum threshold) to customers eligible to receive an enhanced annuity from 1 July 2008 until 31 May 2016. The purpose of this review is to identify whether these customers received sufficient information about enhanced annuities to make the right decisions about their purchase, and, where appropriate, provide redress to customers who have suffered loss as a result of not having received sufficient information. SLAL continues to work with the FCA regarding the process for conducting this past business review.

Under the indemnity if SLAL suffers a loss in excess of the provision it recognised at 31 December 2017 of £248m in relation to annuity sales practices, the Group will pay the excess to Phoenix subject to a £120m cap. If that provision is not fully utilised Phoenix will pay the Group the unutilised amount. In addition SLAL shall pay to the Group any recovery received under the related insurance policies. SLAL had sought for up to £100m of the financial impact to be mitigated by insurance and an update is provided on this insurance recovery on page 205. If SLAL is subject to an FCA-levied financial penalty relating to the review, the Group shall pay an equivalent amount to Phoenix, subject to a £35m cap.

The technique used to value this element of the contingent consideration is to assess the likelihood of an over or under utilisation of the 31 December 2017 provision. The likelihood of a receipt of recoveries from the related insurance policies is also considered. Finally the likelihood of a payment related to any financial penalty has been considered. (Refer 41(d)(iv) for further details.)

Persistency: If SLAL suffers adverse lapse experience relating to certain UK unit linked products (but excluding unit linked products written in a with profits fund) prior to 31 December 2019, the Group shall make a payment to Phoenix, based on the difference between expected and actual lapse experience, subject to a £75m cap.

The technique used to value this element of the contingent consideration is based on a statistical model used for the Group's Solvency II reporting at 31 December 2017, with each possible outcome weighted by the likelihood of that outcome.

Brexit recapitalisation: The Group shall pay to Phoenix an amount related to any additional capital, in excess of an agreed amount, that is required to be contributed to Standard Life International Designated Activity Company (SLIDAC) in respect of the transfer of certain German and Irish branch businesses of SLAL to SLIDAC pursuant to Brexit-related transfers. This payment is subject to a cap of £50m.

The technique used to value this element of the contingent consideration determines the range of potential payments under the indemnity with possible outcomes weighted by the likelihood of the outcome.

Non-participating investment contract liabilities

The fair value of the non-participating investment contract liabilities is calculated equal to the fair value of the underlying assets and liabilities in the funds. Thus, the value of these liabilities is dependent on the methods and assumptions set out above in relation to the underlying assets and liabilities in which these funds are invested. The underlying assets and liabilities are predominately categorised as level 1 or 2 and as such, the inputs into the valuation of the liabilities are observable. Therefore, the liabilities are categorised within level 2 of the fair value hierarchy.

Liabilities in respect of third party interest in consolidated funds

The fair value of liabilities in respect of third party interest in consolidated funds is calculated equal to the fair value of the underlying assets and liabilities in the funds. Thus, the value of these liabilities is dependent on the methods and assumptions set out above in relation to the underlying assets in which these funds are invested. When the underlying assets and liabilities are valued using readily available market information the liabilities in respect of third party interest in consolidated funds are treated as level 2. Where the underlying assets and liabilities are not valued using readily available market information the liabilities in respect of third party interest in consolidated funds are treated as level 3.

(d)(i) Fair value hierarchy for assets measured at fair value in the statement of financial position

The table below presents the Group's assets measured at fair value by level of the fair value hierarchy.

							Fair value hierarchy
	As recognised in the consolidated statement of financial position line item		Classified as held for sale		Total		Level 1		Level 2		Level 3
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Investment property	-	9,749	-	200	-	9,949	-	-	-	-	-	9,949
Owner occupied property	2	81	-	11	2	92	-	-	-	-	2	92
Derivative financial assets	21	3,053	-	-	21	3,053	1	990	20	2,063	-	-
Equity securities and interests in pooled investment vehicles	2,030	99,020	699	763	2,729	99,783	2,510	98,750	160	36	59	997
Debt securities	1,723	61,565	13	14	1,736	61,579	178	25,230	1,557	34,905	1	1,444
Contingent consideration asset	8	6	-	-	8	6	-	-	-	-	8	6
Total assets at fair value	3,784	173,474	712	988	4,496	174,462	2,689	124,970	1,737	37,004	70	12,488

There were no significant transfers between levels 1 and 2 during the year (2017: none). Refer Note 41(d)(iii) for details of movements in level 3.

(d)(ii)      Fair value hierarchy for liabilities measured at fair value in the statement of financial position

The table below presents the Group's liabilities measured at fair value by level of the fair value hierarchy.

							Fair value hierarchy
	As recognised in the consolidated statement of financial position line item		Classified as held for sale		Total		Level 1		Level 2		Level 3
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Non-participating investment contract liabilities	1,468	105,765	52	62	1,520	105,827	-	-	1,520	105,827	-	-
Liabilities in respect of third party interest in consolidated funds	254	16,457	14	28	268	16,485	-	-	268	15,187	-	1,298
Derivative financial liabilities	6	813	-	-	6	813	1	161	5	652	-	-
Contingent consideration liabilities	29	25	-	-	29	25	-	-	-	-	29	25
Total liabilities at fair value	1,757	123,060	66	90	1,823	123,150	1	161	1,793	121,666	29	1,323

There were no significant transfers between levels 1 and 2 during the year (2017: none). Refer Note 41(d)(iii) for details of movements in level 3.

(d)(iii)     Reconciliation of movements in level 3 instruments

The movements during the year of level 3 assets and liabilities held at fair value, excluding assets and liabilities held for sale, are analysed below.

	Investment property		Owner occupied property		Equity securities and interests in pooled investment funds		Debt securities		Liabilities in respect of third party interest in consolidated funds
	2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 January	9,749	9,929	81	58	994	958	1,444	868	(1,298)	(1,228)
Reclassified to held for sale during the year	(9,749)	(225)	(79)	(4)	(921)	-	(1,443)	-	1,298	-
Reclassification between investment property and debt securities1	-	(319)	-	-	-	-	-	319	-	-
Acquired through business combinations	-	-	-	2	-	100	-	-	-	-
Total gains/(losses) recognised in the consolidated income statement	-	485	-	4	5	72	-	35	-	(57)
Purchases	-	413	-	3	18	191	-	362	-	(88)
Settlement	-	-	-	-	-	-	-	-	-	75
Sales	-	(525)	-	-	(37)	(317)	-	(125)	-	-
Transfers in to level 32	-	-	-	-	-	8	-	27	-	-
Transfers out of level 32	-	-	-	-	-	(7)	-	(42)	-	-
Transfers between investment property and owner occupied property	-	(17)	-	17	-	-	-	-	-	-
Foreign exchange adjustment	-	11	-	-	-	(13)	-	-	-	-
Total gains recognised on revaluation of owner occupied property within other comprehensive income	-	-	-	1	-	-	-	-	-	-
Other	-	(3)	-	-	-	2	-	-	-	-
At 31 December	-	9,749	2	81	59	994	1	1,444	-	(1,298)

¹    During 2017 income strips measured at £319m which were previously included within investment property were reclassified as debt securities to reflect the underlying nature of these instruments.

²    Transfers are deemed to have occurred at the end of the calendar quarter in which they arose.

	Contingent consideration asset		Contingent consideration liabilities
	2018	2017	2018	2017
	£m	£m	£m	£m
At start of period	6	10	(25)	(15)
Acquired through business combinations	-	-	(19)	(39)
Total amounts recognised in the income statement	(6)	(4)	9	3
Additions	8	-	-	-
Settlements	-	-	6	261
At end of period	8	6	(29)	(25)

¹    Restated.

For the year ended 31 December 2018, gains of £6m from continuing operations (2017: gains of £3m) were recognised in the IFRS consolidated income statement in respect of assets and liabilities held at fair value classified as level 3 at the period end, excluding assets and liabilities held for sale. These amounts are recognised in investment return.

Transfers of equity securities and interests in pooled investment funds and debt securities into level 3 generally arise when external pricing providers stop providing a price or where the price provided is considered stale. Transfers of equity securities and interests in pooled investment funds and debt securities out of level 3 arise when acceptable prices become available from external pricing providers.

(d)(iv)      Significant unobservable inputs in level 3 instrument valuations

The table below identifies the significant unobservable inputs used in determining the fair value of level 3 instruments at 31 December 2018:

	Fair value
2018	£m	Unobservable input	Input used
Equity securities and interests in pooled investment funds	59	This comprises holdings in approximately 80 separate funds, predominantly by value being interests in real estate, infrastructure and private equity funds. Given the numerous unobservable inputs pertaining to the valuation of the underlying assets in the funds no individual unobservable inputs are considered significant.	N/A
Contingent consideration assets and liabilities	(21)	Unobservable inputs relate to probability weighted cash flows and, where relevant, discount rates. The most significant unobservable inputs relate to assumptions used to value the contingent consideration related to the sale of SLAL to Phoenix, in particular those related to:
		·      SLAL's annuity sales practices provision (including the likelihood and value of annuity sales practices insurance recoveries and any FCA-levied penalty)	See below
		·      Future lapse rates on relevant UK unit linked products of SLAL	Statistical distribution used in the Group's Solvency II internal model at 31 December 2017

Estimates and assumptions

The contingent consideration related to the annuity sales practices indemnity is considered to be an item for which assumptions and other sources of estimation uncertainty within the valuation technique at the end of the reporting period have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

The valuation of the contingent consideration in relation to this indemnity takes into account our view of the need for any changes in the provision held by SLAL. At 31 December 2018 SLAL has not increased or released any element of the provision that it recognised at 31 December 2017. This reflects the view that the overall level of the provision at 31 December 2017 remains appropriate and therefore that the fair value of this component of the contingent consideration, before considering insurance recoveries and potential FCA-levied penalties, is not material. The valuation technique and underpinning assumptions are as follows:

The key assumptions underlying the provision for annuity sales practices relating to enhanced annuities are:

·  The number of customers entitled to redress

·  The amount of redress payable per customer

·  The costs of conducting the review

The number of customers entitled to redress has been estimated based on:

·  The number of customers in the review population

·  The estimated percentage of these customers eligible for an enhanced annuity

·  The estimated percentage of these eligible customers that did not receive sufficient information from SLAL about enhanced annuities

The FCA thematic review noted that between 39% and 48% of customers who bought a standard annuity may potentially have been eligible for an enhanced annuity. The provision assumes 40% of customers were eligible for an enhanced annuity based on observed experience from SLAL's review.

The FCA thematic review noted, for the industry as a whole, a plausible range of lost income for customers who were entitled to enhanced annuities but purchased standard annuities to be between £120 and £240 per annum for an average annuity purchase price of £25,000.

The lost income for customers who were entitled to enhanced annuities, for an average purchase price of £25,000, is assumed to be £300 per annum. This assumption is based on expected experience from SLAL's review utilising the redress calculator provided by the FCA in early 2018. This assumption is unchanged from that used at end 2017.

Assumptions relating to future annuity payments are consistent with SLAL's other annuity reserving assumptions.

The costs of conducting the review relate to administrative expenses per case and wider project costs. The costs are based on SLAL's project planning.

Sensitivities are provided in the table below.

Assumption	Change in assumption	Consequential change in contingent consideration valuation
Percentage of customers eligible for an enhanced annuity	Percentage changed by +/-5 (e.g. 40% increased to 45%)	+/- £18m
Percentage of eligible customers that did not receive sufficient information from SLAL about enhanced annuities	Percentage changed by +/-5	+/- £9m
Lost income per annum for an average annuity purchase of £25,000	+/- £50	+/- £28m
Costs per case of conducting the review	+/- 20% of the cost per case	+/- £5m

In addition, the fair value of the contingent consideration has taken into account that substantially all of the £100m being sought by SLAL under insurance policies to mitigate the financial impact was received by the Group in January 2019 and has been based on an assessment of the likelihood of a financial penalty and the FCA's methodology for calculating such penalties.

The table below identifies the significant unobservable inputs used in determining the fair value of level 3 instruments at 31 December 2017 and quantifies the range of these inputs used in the valuation at that reporting date:

	Fair value
2017	£m	Valuation technique	Unobservable input	Range (weighted average)
Investment property and owner occupied property	9,571	Income capitalisation	Equivalent yield Estimated rental value per square metre per annum	3.3% to 9.0% (5.2%) £32 to £1,716 (£326)
Investment property (hotels)	402	Income capitalisation	Equivalent yield Estimated rental value per room per annum	3.8% to 6.6% (5.1%) £995 to £10,000 (£5,841)
Investment property and owner occupied property	68	Market comparison	Estimated value per square metre	£2 to £10,932 (£3,451)
Equity securities and interests in pooled investment funds	997	Adjusted net asset value	Adjustment to net asset value1	N/A
Debt securities (commercial mortgages)	379	Discounted cash flow	Credit spread	1.9% to 2.6% (2.2%)
Debt securities (income strips)	520	Income capitalisation	Equivalent yield	4.1% to 6.5% (5.1%)
Debt securities (unquoted corporate bonds)	506	Discounted cash flow	Credit spread	0.7% to 2.1% (1.6%)
Debt securities (infrastructure loans)	39	Discounted cash flow	Credit spread	1.9% to 2.6% (2.3%)

¹    An adjustment is made to the valuations of private equity investments received from the investment managers of the underlying funds to estimate the effect of changes in market conditions between the date of their valuations and the end of the reporting period using market indices. The adjustment made at 31 December 2018 was £nil (2017: £nil).

(d)(v) Sensitivity of the fair value of level 3 instruments to changes in key assumptions

At 31 December 2018 the shareholder is directly exposed to movements in the value of all level 3 instruments since none are held in the Group's unit linked funds or in consolidated structured entities. Estimates, assumptions and sensitivities relating to contingent consideration assets and liabilities are discussed in Section (d)(iv). Changing unobservable inputs in the measurement of the fair value of other level 3 financial assets and financial liabilities to reasonably possible alternative assumptions would not have a significant impact on profit attributable to equity holders or on total assets.

Prior to the disposal of SLAL the shareholder was directly exposed to movements in the value of level 3 instruments held by the shareholder business (to the extent they were offset by opposite movements in investment and insurance contract liabilities). Movements in level 3 instruments held by the participating business and unit linked funds risk segments were offset by an opposite movement in investment and insurance contract liabilities and therefore the shareholder was not directly exposed to such movements unless they were sufficiently severe to cause the assets of the participating business to be insufficient to meet the obligations to policyholders. Movements in level 3 instruments held in the TPICF and NCI risk segment were offset by opposite movements in the liabilities in respect of third party interest in consolidated funds and in equity attributable to non-controlling interest and therefore the shareholder was not directly exposed to such movements.

(e)     Assets and liabilities not carried at fair value

The table below presents estimated fair values by level of the fair value hierarchy of assets and liabilities whose carrying value does not approximate fair value. Fair values of assets and liabilities are based on observable market inputs where available, or are estimated using other valuation techniques.

		As recognised in the consolidated statement of financial position line item		Fair value		Level 1		Level 2		Level 3
		2018	2017	2018	2017	2018	2017	2018	2017	2018	2017
	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Assets
Loans secured by mortgages	20	-	57	-	64	-	-	-	64	-	-
Liabilities
Non-participating investment contract liabilities	33	-	4	-	4	-	-	-	-	-	4
Capital notes	34	-	377	-	377	-	-	-	377	-	-
Subordinated notes	34	1,081	1,056	1,088	1,128	-	-	1,088	1,128	-	-
Subordinated guaranteed bonds	34	-	502	-	650	-	-	-	650	-	-
Mutual Assurance Capital Securities	34	-	318	-	349	-	-	-	349	-	-

The estimated fair values for subordinated liabilities are based on the quoted market offer price. The estimated fair values of the other instruments detailed above are calculated by discounting the expected future cash flows at current market rates.

The carrying value of all other financial assets and liabilities measured at amortised cost approximates their fair value.

42.   Statement of cash flows

The tables below provide further analysis of the balances in the statement of cash flows.

(a)     Change in operating assets

	2018	2017
	£m	£m
Investment property	(303)	(373)
Equity securities and interests in pooled investment funds	1,369	(6,958)
Debt securities	3,142	7,279
Derivative financial instruments	269	305
Reinsurance assets	328	568
Investments in associates and joint ventures accounted for using the equity method	44	21
Receivables and other financial assets and other assets	(1,796)	211
Deferred acquisition costs	(13)	30
Loans	27	206
Assets held for sale	250	62
Change in operating assets	3,317	1,351

(b)     Change in operating liabilities

	2018	2017
	£m	£m
Other financial liabilities, provisions and other liabilities	1,260	(897)
Deposits received from reinsurers	(397)	(460)
Pension and other post-retirement benefit provisions	(7)	(33)
Deferred income	57	(41)
Insurance contract liabilities	(586)	(1,090)
Investment contract liabilities	(2,756)	1,853
Change in liability for third party interest in consolidated funds	(46)	480
Liabilities held for sale	(76)	104
Change in operating liabilities	(2,551)	(84)

(c)     Other non-cash and non-operating items

		2018	2017
		£m	£m
Gain on sale of subsidiaries		(1,780)	-
Profit on disposal of associates		(185)	(319)
Loss on disposal of property, plant and equipment		1	1
Depreciation of property, plant and equipment		20	15
Amortisation of intangible assets		224	124
Impairment losses on intangible assets		926	77
Impairment of associates		228	-
Impairment losses (reversed)/recognised on property, plant and equipment		-	(4)
Impairment losses on disposal group held for sale		2	24
Equity settled share-based payments		36	39
Other interest cost		2	3
Finance costs		80	88
Share of profit from associates and joint ventures accounted for using the equity method		(135)	(45)
Other non-cash and non-operating items		(581)	3

 (d)    Disposal of subsidiaries

			2018
	Notes		£m
Deferred acquisition costs			622
Investment property			10,068
Reinsurance assets			4,474
Derivative financial assets			2,969
Equity securities and interests in pooled investment funds			96,351
Debt securities			56,712
Receivables and other financial assets			1,162
Other assets of operations disposed of excluding cash and cash equivalents			8,086
Non-participating insurance contract liabilities			(22,207)
Non-participating investment contract liabilities			(102,216)
Participating contract liabilities			(30,244)
Deposits received from reinsurers			(4,236)
Derivative financial liabilities			(957)
Third party interest in consolidated funds			(15,581)
Other financial liabilities			(2,861)
Other liabilities of operations disposed of			(790)
Non-controlling interests - ordinary shares			(282)
Net assets disposed of			1,070
Items transferred to profit or loss on disposal of subsidiaries	1		(43)
Gain on sale	1		1,780
Transaction and separation costs	1		117
Deferred income recognised			78
Non-cash consideration - Phoenix shares			(1,023)
Contingent consideration asset recognised			(8)
Total cash consideration			1,971
Cash and cash equivalents disposed of			(7,472)
Cash outflow from disposal of subsidiary	1		(5,501)

There were no operations disposed of in the year ended 31 December 2017.

(e)     Movement in non-controlling interests - ordinary shares and third party interest in consolidated funds arising from financing activities

The following table reconciles the movement in non-controlling interests and third party interests in consolidated funds in the year, split between cash and non-cash items.

	2018			2017
	Non-controlling interests - ordinary shares	Third party interest in consolidated funds	Total	Non-controlling interests - ordinary shares	Third party interest in consolidated funds	Total
	£m	£m	£m	£m	£m	£m
At 1 January	289	16,457	16,746	297	16,835	17,132
Cash flows from financing activities
Net settlements of units by third parties	-	(507)	(507)	(5)	(1,006)	(1,011)
Cash distributions	(9)	(60)	(69)	(7)	(102)	(109)
Cash flows from financing activities	(9)	(567)	(576)	(12)	(1,108)	(1,120)
Non-cash items
Foreign exchange differences on translating foreign operations	-	28	28	-	(54)	(54)
Profit in the year attributable to non-controlling interests - ordinary shares	5	-	5	25	-	25
Change in liability for third party interest in consolidated funds	-	(37)	(37)	-	1,124	1,124
Movements arising from changes in control of subsidiaries and other non-cash movements	(281)	(15,474)	(15,755)	(1)	(157)	(158)
Non-cash distributions	(2)	(153)	(155)	(20)	(183)	(203)
At 31 December	2	254	256	289	16,457	16,746

(f)      Movement in subordinated liabilities

The following table reconciles the movement in subordinated liabilities in the year, split between cash and non-cash items.

	2018	2017
	£m	£m
At 1 January	2,253	1,319
Cash flows from financing activities
Repayment of subordinated liabilities	(363)	-
Proceeds of issue of subordinated liabilities	(4)	565
Interest paid	(117)	(81)
Cash flows from financing activities	(484)	484
Non-cash items
Amounts reclassified from equity	-	380
Amounts reclassified to equity	(803)	-
Interest expense	91	88
Amortisation	1	1
Foreign exchange adjustment	23	(19)
At 31 December	1,081	2,253

In addition to the interest paid on subordinated liabilities of £117m (2017: £81m), interest paid in the consolidated statement of cash flows includes £nil (2017: £13m) in relation to interest paid on perpetual debt instruments classified as equity. In addition to the repayment of subordinated liabilities of £363m (2017: £nil), an additional £1,014m (2017 £nil) was redeemed from equity.

43.   Contingent liabilities and contingent assets

Contingent liabilities are possible obligations of the Group of which timing and amount are subject to significant uncertainty. Contingent liabilities are not recognised on the consolidated statement of financial position but are disclosed, unless they are considered remote. If such an obligation becomes probable and the amount can be measured reliably it is no longer considered contingent and is recognised as a liability.

Conversely, contingent assets are possible benefits to the Group. Contingent assets are only disclosed if it is probable that the Group will receive the benefit. If such a benefit becomes virtually certain it is no longer considered contingent and is recognised as an asset.

Legal proceedings, complaints and regulations

The Group is subject to regulation in all of the territories in which it operates insurance and investment businesses. In the UK, where the Group primarily operates, the FCA has broad powers, including powers to investigate marketing and sales practices.

The Group, like other financial organisations, is subject to legal proceedings, complaints and regulatory discussions, reviews and challenges in the normal course of its business. All such material matters are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of the Group incurring a liability. Where it is concluded that it is more likely than not that a material outflow will be made a provision is established based on management's best estimate of the amount that will be payable. In some cases it will not be possible to form a view, for example because the facts are unclear or because further time is needed to properly investigate, and no provisions are held for such matters. It is not possible to predict with certainty the extent and timing of the financial impact of legal proceedings, complaints and related regulatory matters. 

44.   Commitments

The Group has contractual commitments in respect of expenditure on investment property, funding arrangements and leases which will be payable in future periods. These commitments are not recognised on the Group's statement of financial position at the year end but are disclosed to give an indication of the Group's future committed cash flows.

All Group leases are operating leases, being leases where the lessor retains substantially all the risks and rewards of the ownership of the leased asset.

(a)     Capital commitments

The Group's investment property was sold in the year so there are no capital commitments in respect of investment property as at 31 December 2018. As at 31 December 2017, capital expenditure that was authorised and contracted for, but not provided and incurred was £167m in respect of investment property and income strips (discussed in Note 41). Of this amount, £147m related to the contractual obligations to purchase, construct, or develop property and £20m related to repair, maintain or enhance property respectively.

(b)     Unrecognised financial instruments

The Group has committed £37m (2017: £447m) in respect of unrecognised financial instruments to customers and third parties. Of this amount £nil (2017: £360m) is committed by consolidated private equity funds. These commitments will be funded through contractually agreed additional investments both by the Group, through its controlling interests, and the funds' non-controlling interests. The level of funding provided by each will not necessarily be in line with the current ownership profile of the funds.

(c)     Operating lease commitments

The Group has entered into commercial non-cancellable leases on certain property, plant and equipment where it is not in the best interest of the Group to purchase these assets. Such leases have varying terms, escalation clauses and renewal rights.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

	2018	2017 restated1
	£m	£m
Not later than one year	39	37
Later than one year and no later than five years	109	90
Later than five years	102	61
Total operating lease commitments	250	188

¹    Comparatives for 2017 have been restated to reflect the classification of the UK and European insurance business as discontinued operations. Refer Note 1.

(d)     Customer contracts

At 31 December 2017 the Group had contractual commitments in place to acquire Customer contracts for £74m. These acquisitions were completed in 2018.

45.   Employee share-based payments and deferred fund awards

The Group operates share incentive plans for its employees. These generally take the form of an award of options or shares in Standard Life Aberdeen plc (equity-settled share-based payments) but can also take the form of a cash award based on the share price of Standard Life Aberdeen plc (cash-settled share-based payments). Aberdeen Asset Management PLC and its subsidiaries also incentivise certain employees through the award of units in Group managed funds (deferred fund awards) which are cash-settled. All the Group's incentive plans have conditions attached before the employee becomes entitled to the award. These can be performance and/or service conditions (vesting conditions) or the requirement of employees to save in the save-as-you-earn scheme (non-vesting condition). The period over which all vesting conditions are satisfied is the vesting period and the awards vest at the end of this period.

For all share-based payments services received for the incentive granted are measured at fair value.

For cash-settled share-based payment and deferred fund awards transactions, services received are measured at the fair value of the liability. The fair value of the liability is remeasured at each reporting date and any changes in fair value are recognised in the consolidated income statement.

For equity-settled share-based payment transactions, the fair value of services received is measured by reference to the fair value of the equity instruments at the grant date. The fair value of the number of instruments expected to vest is charged to the income statement over the vesting period with a corresponding credit to the equity compensation reserve in equity.

At each period end the Group reassesses the number of equity instruments expected to vest and recognises any difference between the revised and original estimate in the consolidated income statement with a corresponding adjustment to the equity compensation reserve.

Replacement share-based payment awards granted in a business combination are included in determining the consideration transferred. The amount included is calculated by reference to the pre-combination service and the market-measure of the replaced awards.

At the time the equity instruments vest, the amount recognised in the equity compensation reserve in respect of those equity instruments is transferred to retained earnings.

Share options

(i)      Long-term incentive plans

The Group operates the following long-term incentive plans.

Plan	Recipients	Conditions which must be met prior to vesting
Standard Life Long-term incentive plan (Standard Life LTIP)	Executives and senior management	Service and performance conditions as set out in the Directors' remuneration report
Standard Life Investments Long-Term Incentive Plan (Standard Life Investments LTIP)	Executives and senior management	Service and performance conditions as set out in the Directors' remuneration report
Standard Life Restricted stock plan (Standard Life RSP)	Executives (other than executive Directors) and senior management	Service, or service and performance conditions. These are tailored to the individual award

All of the awards are equity-settled other than awards made under the Standard Life Investments LTIP in respect of employees in the US, France and Asia which are cash-settled.

 (ii)    Annual bonus deferred share options

The Group operates the following deferred bonus plans which award share options.

Plan	Recipients	Conditions which must be met prior to vesting
Short-term incentive plan (Standard Life Group STIP)	Executives and senior management	Service and performance conditions as set out in the Directors' remuneration report. There are no outstanding performance conditions.
Aberdeen Asset Management Deferred Share Plan 2009 (Aberdeen Asset Management DSP 2009)	Executives and senior management	Service conditions of one, two and three years after the date of the award (one to five years for executive management). There are no outstanding performance conditions.

(iii)    Sharesave (Save-as-you-earn)

The Group operates Save-as-you-earn (SAYE) plans, which allow eligible employees in the UK and Ireland the opportunity to save a monthly amount from their salaries, over either a three or five year period, which can be used to purchase shares in the Company. The shares can be purchased at the end of the savings period at a predetermined price. Employees are granted a predetermined number of options based on the monthly savings amount and duration of their contract. The conditions attached to the options are that the employee remains in employment for three years after the grant date of the options and that the employee satisfies the monthly savings requirement. Settlement is made in the form of shares.

Other share plans

(i)      Annual bonus deferred share awards

The Group operates the following deferred bonus plan which awards conditional shares. 

Plan	Recipients	Conditions which must be met prior to vesting
Aberdeen Asset Management USA Deferred Share Award Plan (Aberdeen Asset Management USA DSAP)	US based executives and senior management	Service conditions of one, two and three years after the date of the award (one to five years for executive management). There are no outstanding performance conditions.

Unlike share options under the Aberdeen Asset Management DSP 2009 which have an exercise period, conditional shares awarded under the Aberdeen Asset Management USA DSAP have no exercise period and the employee receives the shares at the end of the award's vesting period.

(ii)     Share incentive plan

The Group operates a share incentive plan, allowing employees the opportunity to buy shares from their salary each month. The maximum purchase that an employee can make in any year is £1,800. The Group offers to match the number of shares bought up to a value of £50 each month. The matching shares awarded under the share incentive plan are granted at the end of each month. The matching shares are generally subject to a three year service period.

Employees may forfeit some or all of share options or awards made under any of the above share-based payment schemes if they leave the Group prior to the end of the awards' vesting periods.

Replacement awards

On the acquisition of Aberdeen on 14 August 2017, the outstanding options and awards for Aberdeen Asset Management PLC shares under the Aberdeen Asset Management DSP 2009 and Aberdeen Asset Management USA DSAP were replaced with equivalent options and awards for Standard Life Aberdeen plc shares. Aberdeen also operated a long-term incentive plan which was fully vested prior to acquisition and replaced awards were also issued for the remaining unexercised options. At the same date, options and awards for Standard Life Aberdeen plc shares were made to relevant Aberdeen employees by the plan in respect of pre-acquisition bonus.

(a)     Options granted

The number, weighted average exercise price and weighted average remaining contractual life for options outstanding during the year are as follows:

	2018					2017
	Long-term incentive plans (excluding RSP)	RSP	Annual bonus deferred share options	Sharesave	Weighted average exercise price for Sharesave	Long-term incentive plans (excluding RSP)	RSP	Annual bonus deferred share options	Sharesave	Weighted average exercise price for Sharesave
Outstanding at 1 January	52,005,776	7,104,089	28,216,634	9,004,370	316p	39,735,747	3,826,208	553,038	7,575,279	290p
Granted	20,476,434	1,460,199	3,434,492	3,712,915	257p	23,088,821	4,909,639	4,320,815	3,701,031	345p
Replaced	-	-	-	-	-	615,761	-	29,081,898	-	-
Forfeited	(10,979,340)	(437,714)	(312,312)	(807,186)	309p	(7,653,616)	(123,520)	(80,319)	(220,088)	302p
Exercised	(5,800,093)	(1,564,388)	(5,118,094)	(680,119)	287p	(3,778,506)	(1,464,118)	(5,621,989)	(1,898,442)	274p
Expired	-	-	-	-	-	(2,431)	-	-	(22,259)	233p
Cancelled	-	-	-	(1,969,591)	328p	-	(44,120)	(36,809)	(131,151)	298p
Outstanding at 31 December	55,702,777	6,562,186	26,220,720	9,260,389	292p	52,005,776	7,104,089	28,216,634	9,004,370	316p
Exercisable at 31 December	-	20,152	9,816,708	2,292,876	313p	585,889	59,611	8,447,606	291,259	288p
Remaining contractual life of options outstanding (years)1	1.96	1.38	7.10	2.65		2.06	1.63	10.36	2.84

¹    Weighted average.

The exercise price for options granted under all long-term and deferred bonus schemes is nil. The fair value of options granted under the Group's incentive schemes is determined using a relevant valuation technique, such as the Black Scholes option pricing model.

The following table shows the weighted average assumptions that were considered in determining the fair value of options granted during the year and the share price at exercise of options exercised during the year.

	Long-term incentive plans (excluding RSP)	RSP	Annual bonus deferred share options	Sharesave
Options granted during the year
Grant date	28 March 2018	Throughout	5 March 2018 and 29 March 2018	23 October 2018
Share price at grant date1	362p	335p	359p	261p
Fair value at grant date1	362p	335p	359p	14p
Exercise price	Nil	Nil	Nil	256p-257p
Dividends	The plans include the entitlement to the receipt of dividends in respect of awards that ultimately vest between the date of grant and the vesting date	The plans include the entitlement to the receipt of dividends in respect of awards that ultimately vest between the date of grant and the vesting date	The plan includes the entitlement to the receipt of dividends in respect of awards that ultimately vest between the date of grant and the vesting date for the Standard Life Group STIP and the exercise date for the Aberdeen Asset Management DSP 2009	No dividend entitlement
Option term (years)1	3.44	2.34	3.11	3.49
Options exercised during the year
Share price at time of exercise1	354p	352p	310p	338p

¹    Weighted average.

The options granted on deferred bonus plans also included 1,026,174 options which related to prior year awards which could only be granted in February 2018 due to market restrictions. The fair value of the awards was determined based on the share price at the date that the awards would have been made if the market restrictions had not been in place rather than the share price at the date the awards were granted. The weighted average fair value of these options was 404p with an option term of 3.75 years.

No departures from share option schemes are expected at grant date, with any leavers being accounted for on departure. In determining the fair value of options granted under the Sharesave scheme the historic volatility of the share price over a period of up to five years and a risk free rate determined by reference to swap rates was also considered.

The following table shows the range of exercise prices of options outstanding at 31 December 2018. All options are exercisable for a period of six months after the vesting date except for the options under the Aberdeen Asset Management DSP 2009 which are exercisable up to 10 years after the grant date.

	2018	2017
	Number of options outstanding	Number of options outstanding
Long-term incentive plans
£nil	62,264,963	58,567,339
172p	-	542,526
Annual bonus deferred share options
£nil	26,220,720	28,216,634
Sharesave
200p-327p	6,102,619	3,949,902
328p-402p	3,157,770	5,054,468
Outstanding at 31 December	97,746,072	96,330,869

(b)     Other share plans

	2018		2017
	Annual bonus deferred share awards	Share incentive  plan1	Annual bonus deferred share awards	Share incentive  plan1
Number of share awards granted	285,500	562,261	955,823	529,277
Number of share awards replaced	-	-	573,099	-
Share price at date of grant2	364p	336p	411p3	396p
Fair value per granted instrument at grant date2	364p	336p	411p	396p

¹    Included in the number of instruments granted are 5,898 (2017: 9,048) rights to shares granted to eligible employees in Germany and Austria.

²    Weighted average.

³    The fair value of share awards replaced under the Annual bonus deferred share awards in 2017 was calculated by reference to the share price on acquisition of Aberdeen adjusted for pre-combination service. The fair value of instruments granted is calculated by reference to the share price at grant date.  

At the grant date all awards are expected to vest. No departures are expected at the grant date, with leavers being accounted for on departure. The plans include the entitlement to the receipt of dividends in respect of awards that ultimately vest between the date of grant and the vesting date.

(c)     Employee share-based payment expense and deferred fund awards

The amounts recognised as an expense for equity-settled share-based payment transactions and deferred fund awards with employees are as follows:

	2018	2017
	£m	£m
Share options granted under long-term incentive plans	-	19
Share options granted under Sharesave	2	1
Share options and share awards granted under deferred bonus plans	33	18
Matching shares granted under share incentive plans	1	1
Equity-settled share-based payments	36	39
Cash-settled share-based payments	-	1
Cash-settled deferred fund awards	9	10
Total expense	45	50

Included in the expense above is £31m (2017: £12m) of share-based payment expenses which are included in restructuring and corporate transaction expenses in the consolidated income statement.

The liability for cash-settled share-based payments outstanding at 31 December 2018 is £2m (2017: £3m).

Deferred fund awards

At 31 December 2018, the liability recognised for cash-settled deferred awards was £48m (2017: £52m). The total intrinsic value of unvested awards at 31 December 2018 was £31m (2017: £31m).

46.   Related party transactions

(a)     Transactions and balances with related parties

In the normal course of business, the Group enters into transactions with related parties that relate to insurance and investment management business. 

During the year, the Group recognised management fees from Group managed non-consolidated investment vehicles. These fees are disclosed in Note 40. It also recognised management fees of £4m (2017: £4m) from the Group's defined benefit pension plans.

In the year ended 31 December 2018, for associates accounted for using the equity method, the Group recognised sales primarily in relation to management fees of £89m (2017: £nil) and purchases in relation to services received of £28m (2017: £nil).

There were no sales to or purchases from joint ventures during the year ended 31 December 2018 (2017: none).

In addition to these transactions between the Group and related parties during the year, in the normal course of business the Group made a number of investments into/divestments from investment vehicles managed by the Group including investment vehicles which are classified as investments in associates measured at FVTPL. Group entities paid amounts for the issue of shares or units and received amounts for the cancellation of shares or units.

The Group had balances due from associates accounted for using the equity method of £63m (2017: £nil), balances due to associates accounted for using the equity method of £19m (2017: £nil) and no balances due to or from joint ventures as at 31 December 2018 (2017: none). The Group's defined benefit pension plans have assets of £1,132m (2017: £1,210m) invested in investment vehicles managed by the Group.

(b)     Compensation of key management personnel

In 2018 key management personnel includes Directors of Standard Life Aberdeen plc (since appointment) and the Chief Executive Officer Pensions and Savings for the period from 1 January 2018 until 31 August 2018 and from 1 September 2018 includes Directors of Standard Life Aberdeen plc and the members of the executive committee (since appointment). In 2017 key management personnel included Directors of Standard Life Aberdeen plc (since appointment) and the Chief Executive Officer Pensions and Savings. Detailed disclosures of Directors' remuneration for the year and transactions in which the Directors are interested are contained within the audited section of the Directors' remuneration report.

The summary of compensation of key management personnel is as follows:

	2018	2017
	£m	£m
Salaries and other short-term employee benefits	6	9
Post-employment benefits	-	-
Share-based payments	6	3
Termination benefits	-	1
Total compensation of key management personnel	12	13

(c)     Transactions with key management personnel and their close family members

Certain members of key management personnel hold investments in investments products which are managed by the Group. None of the amounts concerned are material in the context of funds managed by the Group. All transactions between key management and their close family members and the Group during the year are on terms which are equivalent to those available to all employees of the Group.

47.   Capital management

(a)     Capital and risk management policies and objectives

Managing capital is the ongoing process of determining and maintaining the quantity and quality of capital appropriate for the Group and ensuring capital is deployed in a manner consistent with the expectations of our stakeholders. For these purposes, the Board considers our key stakeholders to be our clients, the providers of capital (our equity holders and holders of our subordinated liabilities) and the Financial Conduct Authority (FCA) as the lead prudential supervisor for the Group.

There are two primary objectives of capital management within the Group. The first objective is to ensure that capital is, and will continue to be, adequate to maintain the required level of financial stability of the Group and hence to provide an appropriate degree of security to our stakeholders. The second objective is to create equity holder value by driving profit attributable to equity holders.

The liquidity and capital management policy forms one element of the Group's overall management framework. Most notably, it operates alongside and complements the strategic investment policy and the Group risk policies. Integrating policies in this way enables the Group to have a capital management framework that robustly links the process of capital allocation, value creation and risk management.

Capital requirements are forecast on a periodic basis and assessed against the forecast available capital resources. In addition, internal rates of return achieved on capital invested are assessed against hurdle rates, which are intended to represent the minimum acceptable return given the risks associated with each investment. The capital planning process is the responsibility of the Chief Financial Officer. Capital plans are ultimately subject to approval by the Board.

The formal procedures for identifying and assessing risks that could affect the capital position of the Group are described in the risk management policies set out in Note 39.

 (b) Regulatory capital

(b)(i) Regulatory capital framework

From 31 August 2018, following the sale of the UK and European insurance business to Phoenix, the Group is supervised under the CRD IV regulatory regime for group prudential supervisory purposes and therefore measures and monitors its capital on that basis. Previously, the Group was subject to the Solvency II (SII) regulatory regime. The Group's regulatory capital position under CRD IV is determined by consolidating the eligible capital and reserves of the Group (subject to a number of deductions) to derive regulatory capital resources, and comparing this to the Group's regulatory capital requirements.

Stress testing is completed to determine the appropriate level of regulatory capital and liquidity that the Group must hold, with results shared with the FCA at least annually. In addition, the Group monitors a range of capital and liquidity statistics on a daily, monthly or less frequent basis as required. Surplus capital levels are forecast, taking account of projected dividends and investment requirements, to ensure that appropriate levels of capital resources are maintained.

The Group is required to hold capital resources to cover both Pillar 1 and Pillar 2 capital requirements, described below.

Pillar 1 - minimum requirement for capital

Pillar 1 focuses on fixed overhead requirements and the Group's exposure to credit and market risks in respect of risk-weighted assets, and sets a minimum requirement for capital based on these measures. At 31 December 2018, the Group's draft Pillar 1 minimum requirement for capital was £0.3bn.

Pillar 2 - ICAAP and supervisory review and evaluation process

Pillar 2 supplements the Pillar 1 minimum requirement via the ICAAP, which is the means by which the Group assesses the level of capital that adequately supports all of the relevant current and future risks in its business. The ICAAP focuses on the principal risks to the consolidated financial position and examines each risk category to identify exposures that could put the Group's capital at risk. The results of the Group's ICAAP process will be subject to periodic review by the FCA under the Supervisory Review and Evaluation Process (SREP).

(b)(ii)      Regulatory capital position (unaudited)

	20181
	£bn
IFRS equity attributable to equity holders of Standard Life Aberdeen plc	7.4
Deductions for intangibles and defined benefit pension assets, net of related deferred tax liabilities	(4.5)
Deductions for significant investments in financial sector entities	(1.3)
Other deductions and adjustments, including provision for foreseeable dividend	(0.5)
Common Equity Tier 1 capital resources	1.1
Tier 2 capital resources	0.6
Total regulatory capital resources	1.7
Total regulatory capital requirements	(1.1)
Surplus regulatory capital	0.6

¹    Based on 2018 draft regulatory returns.

The Group has complied with all externally imposed capital requirements during the year. The Group's Pillar 3 disclosures will be published on the Group's website at www.standardlifeaberdeen.com/annualreport before 31 December 2019.

48.   Events after the reporting date

On 11 March 2019, Standard Life (Mauritius Holdings) 2006 Limited informed the National Stock Exchange of India Limited and BSE Limited that it intends to Offer for Sale ('OFS') up to 70,000,000 shares in HDFC Life, with an option to additionally sell up to 29,500,000 shares through the OFS, at a floor price of Rs 357.5 per share. Collectively this represents 4.93% of the total paid up equity share capital of HDFC Life.

Should the full 4.93% be sold through the OFS and at the floor price, it is estimated that the Group would receive a total consideration net of taxes and expenses of approximately Rs.35.3bn (c£380m). Assuming full subscription in the OFS at the floor price, the gain on sale is estimated to be approximately £325m after tax.

Following the sale (assuming full subscription), HDFC Life would remain an associate of the Group and the Group's shareholding subsequent to the OFS would be 490,126,265 equity shares or 24.30% of the issued share capital of HDFC Life.

49.   Related undertakings

The Companies Act 2006 requires disclosure of certain information about the Group's related undertakings which is set out in this note. Related undertakings are subsidiaries, joint ventures, associates and other significant holdings. In this context significant means either a shareholding greater than or equal to 20% of the nominal value of any class of shares, or a book value greater than 20% of the Group's assets.

The particulars of the Company's related undertakings at 31 December 2018 are listed below. For details of the Group's consolidation policy refer to (b) Basis of consolidation in the Presentation of consolidated financial statements section.

The ability of subsidiaries to transfer cash or other assets within the Group for example through payment of cash dividends is generally restricted only by local laws and regulations, and solvency requirements. Included in equity attributable to equity holders of Standard Life Aberdeen plc at 31 December 2018 is £81m (2017: £85m) related to the Standard Life Foundation, a subsidiary undertaking of the Group. During the year to 31 December 2017 the Company made a donation to the Standard Life Foundation related to the unclaimed shares and unclaimed cash that were transferred to the Company on expiry of the Unclaimed Asset Trust claim period in 2016. These assets are now restricted to be used for charitable purposes. Additionally dividends payable on Aberdeen's preference shares rank ahead of any dividends paid on Aberdeen's ordinary shares. These are not considered significant restrictions on the Group's ability to access or use the assets and settle the liabilities of the Group. 

The registered head office of all related undertakings is 1 George St, Edinburgh, EH2 2LL unless otherwise stated.

(a)     Direct subsidiaries

Name of related undertaking		Share class1	% interest held
1825 Financial Planning Limited2		Ordinary shares	100%
30 STMA 1 Limited2		Ordinary shares	100%
30 STMA 2 Limited2		Ordinary shares	100%
30 STMA 3 Limited2		Ordinary shares	100%
30 STMA 4 Limited2		Ordinary shares	100%
30 STMA 5 Limited2		Ordinary shares	100%
Aberdeen Asset Management PLC3		Ordinary shares	100%
Focus Solutions Group Limited5		Ordinary shares	100%
Standard Life Aberdeen Trustee Company Limited		Ordinary shares	100%
Standard Life (Asia Pacific Holdings) Private Limited7		Ordinary shares	100%
Standard Life Charity Fund		N/A	100%
Standard Life Client Management Limited		Ordinary shares	100%
Standard Life Employee Services Limited		Ordinary shares	100%
Standard Life Finance Limited		Ordinary shares	100%
Standard Life Foundation		N/A	100%
Standard Life Investments (Holdings) Limited		Ordinary shares	100%
Standard Life (London) Limited2		Ordinary shares	100%
Standard Life (Mauritius Holdings) 2006 Limited8		Ordinary shares	100%
Standard Life Oversea Holdings Limited		Ordinary shares	100%
Standard Life Savings Limited		Ordinary shares	100%
The Standard Life Assurance Company 2006		N/A	100%
Threesixty Services LLP9		Limited Liability Partnership	100%
Threesixty Support LLP9		Limited Liability Partnership	100%

(b)     Other subsidiaries, joint ventures, associates and other significant holdings

Name of related undertaking

Share class1

% interest held

21 Aberdeen Standard Investments Limited4

Ordinary shares

50%

6 SAS 1 Limited

Ordinary shares

100%

6 SAS 2 Limited

Ordinary shares

100%

Aberdeen ACP LLP3

Limited Liability Partnership

100%

Aberdeen Alternatives (Holdings) Limited3

Ordinary shares

100%

Aberdeen Asia IV (General Partner) S.a.r.l.10

Ordinary shares

100%

Aberdeen Asset Investment Group Limited4

Ordinary shares

100%

Aberdeen Asset Investments Limited4

Ordinary shares

100%

Aberdeen Asset Management Cayman Limited11

Ordinary shares

100%

Aberdeen Asset Management Denmark A/S12

Ordinary shares

100%

Aberdeen Asset Management Finland Oy13

Ordinary shares

100%

Aberdeen Standard Investments Inc.14

Ordinary shares

100%

Aberdeen Asset Management Life and Pensions Limited4

Ordinary shares

100%

Aberdeen Asset Management Norway AS15

Ordinary shares

100%

Aberdeen Asset Management Norway Holding AS15

Ordinary shares

100%

Name of related undertaking

Share class1

% interest held

Aberdeen Asset Management Operations AS15

Ordinary shares

100%

Aberdeen Asset Management Sweden AB16

Ordinary shares

100%

Aberdeen Asset Management US GP Control LLC17

Limited Liability Company

100%

Aberdeen Asset Managers (Luxembourg) S.a.r.l. 18

Ordinary shares

100%

Aberdeen Asset Managers Limited3

Ordinary shares

100%

Aberdeen Asset Middle East Limited19

Ordinary shares

100%

Aberdeen Capital Management LLC20

Limited Liability Company

100%

Aberdeen Capital Managers GP LLC21

Limited Liability Company

100%

Aberdeen Claims Administration, Inc. 14

Ordinary shares

100%

Aberdeen Direct Property (Holding) Limited4

Ordinary shares

100%

Aberdeen Diversified Growth Fund4

Unit trust

56%

Aberdeen Diversified-Core Adventurous Fund4

Unit trust

49%

Aberdeen Diversified-Core Cautious Fund4

Unit trust

62%

Aberdeen Diversified-Core Conservative Fund4

Unit trust

66%

Aberdeen do Brasil Gestao de Recursos Ltda22

Limited Liability Company

100%

Aberdeen Emerging Capital Limited23

Ordinary shares

100%

Aberdeen European Infrastructure Carry GP Limited3

Ordinary shares

100%

Aberdeen European Infrastructure Carry Limited3

Ordinary shares

100%

Aberdeen European Infrastructure GP Limited4

Ordinary shares

100%

Aberdeen European Infrastructure GP II Limited4

Ordinary shares

100%

Aberdeen European Infrastructure GP III Limited4

Ordinary shares

100%

Aberdeen France S.A. 24

Ordinary shares

100%

Aberdeen Fund Distributors LLC17

Limited Liability Company

100%

Aberdeen Fund Management Ireland Limited25

Ordinary shares

100%

Aberdeen Fund Management Norway AS15

Ordinary shares

100%

Aberdeen Fund Management Oy13

Ordinary shares

100%

Aberdeen Fund Management II Oy13

Ordinary shares

100%

Aberdeen General Partner 1 Limited3

Ordinary shares

100%

Aberdeen General Partner 2 Limited3

Ordinary shares

100%

Aberdeen General Partner CAPELP Limited11

Ordinary shares

100%

Aberdeen General Partner CGPLP Limited11

Ordinary shares

100%

Aberdeen General Partner CMENAPELP Limited11

Ordinary shares

100%

Aberdeen General Partner CPELP Limited11

Ordinary shares

100%

Aberdeen General Partner CPELP II Limited11

Ordinary shares

100%

Aberdeen Global - Asian Credit Bond Fund26

SICAV

41%

Aberdeen Global - Emerging Markets Local Currency Corporate Bond Fund26

SICAV

84%

Aberdeen Global - European Equity (ex-UK) Fund26

SICAV

33%

Aberdeen Global - German Equity Fund26

SICAV

93%

Aberdeen Global ex-Japan GP Limited11

Ordinary shares

100%

Aberdeen Global Infrastructure Carry GP Limited3

Ordinary shares

100%

Aberdeen Global Infrastructure GP Limited27

Ordinary shares

100%

Aberdeen Global Infrastructure GP II Limited27

Ordinary shares

100%

Aberdeen GP 1 LLP3

Limited Liability Partnership

100%

Aberdeen GP 2 LLP3

Limited Liability Partnership

100%

Aberdeen GP 3 LLP3

Limited Liability Partnership

100%

Aberdeen Infrastructure Feeder GP Limited3

Ordinary shares

100%

Aberdeen Infrastructure Finance GP Limited27

Ordinary shares

100%

Aberdeen Infrastructure GP II Limited4

Ordinary shares

100%

Aberdeen Investment Company Limited3

Ordinary shares

100%

Aberdeen Investment Solutions Limited3

Ordinary shares

100%

Aberdeen Investments Euro Limited4

Ordinary shares

100%

Aberdeen Investments Jersey Limited28

Ordinary shares

100%

Aberdeen Investments Limited4

Ordinary shares

100%

Aberdeen Investments USD Limited4

Ordinary shares

100%

Aberdeen Islamic Asia Pacific ex-Japan Equity Fund29

Unit trust

41%

Aberdeen Liquidity Fund (Lux)

Seabury Sterling Liquidity 1 Fund26

OEIC

100%

Aberdeen Pension Trustees Limited3

Ordinary shares

100%

Name of related undertaking

Share class1

% interest held

Aberdeen Pooling II GP AB16

Ordinary shares

100%

Aberdeen Private Wealth Management Limited28

Ordinary shares

100%

Aberdeen Property Fund Limited Partner Oy13

Ordinary shares

100%

Aberdeen Property Fund Management (Jersey) Limited30

Ordinary shares

100%

Aberdeen Property Fund Management AB16

Ordinary shares

100%

Aberdeen Property Fund Management Estonia Ou31

Ordinary shares

100%

Aberdeen Property Investors (General Partner) S.a.r.l.32

Ordinary shares

100%

Aberdeen Property Investors Estonia Ou31

Ordinary shares

100%

Aberdeen Property Investors France SAS24

Ordinary shares

100%

Aberdeen Property Investors Limited Partner Oy13

Ordinary shares

100%

Aberdeen Property Investors Sweden AB16

Ordinary shares

100%

Aberdeen Property Investors The Netherlands BV33

Ordinary shares

100%

Aberdeen Real Estate Investors Operations (UK) Limited23

Ordinary shares

100%

Aberdeen Real Estate Operations Limited3

Ordinary shares

100%

Aberdeen Residential JV Feeder Limited Partner Oy13

Ordinary shares

100%

Aberdeen Secondaries II GP S.a.r.l.26

Ordinary shares

100%

Aberdeen SP 2013 A/S12

Ordinary shares

100%

Aberdeen Standard Asset Management (Shanghai) Co., Ltd.34

Ordinary shares

100%

Aberdeen Standard Asset Management (Thailand) Limited35

Ordinary shares

100%

Aberdeen Standard Asset Management Limited

Ordinary shares

100%

Aberdeen Standard Capital (CI) Limited36

Ordinary shares

100%

Aberdeen Standard Capital International Limited36

Ordinary shares

100%

Aberdeen Standard Capital Limited

Ordinary shares

100%

Aberdeen Standard Fund Managers Limited4

Ordinary shares

100%

Aberdeen Standard Greater China Value Fund37

Investment Trust

92%

Aberdeen Standard Group Limited

Ordinary shares

100%

Aberdeen Standard Indonesia Balanced Growth Fund38

Unit Trust

84%

Aberdeen Standard Indonesia Government Bond fund38

Unit Trust

22%

Aberdeen Standard Indonesia Money Market Fund38

Unit Trust

81%

Aberdeen Standard Investment Management Limited

Ordinary shares

100%

Aberdeen Standard Investments (Asia) Limited39

Ordinary shares

100%

Aberdeen Standard Investments (Canada) Limited40

Ordinary shares

100%

Aberdeen Standard Investments (Holdings) Limited

Ordinary shares

100%

Aberdeen Standard Investments (Hong Kong) Limited41

Ordinary shares

100%

Aberdeen Standard Investments (Japan) Limited42

Ordinary shares

100%

Aberdeen Standard Investments (Malaysia) Sdn. Bhd43

Ordinary shares, Irredeemable non-convertible preference shares

100%

Aberdeen Standard Investments (Switzerland) AG44

Ordinary shares

100%

Aberdeen Standard Investments Australia Limited45

Ordinary shares

100%

Aberdeen Standard Investments Co. Ltd. 46

Ordinary shares

100%

Aberdeen Standard Investments Columbia SAS47

Ordinary shares

100%

Aberdeen Standard Investments Deutschland AG48

Ordinary shares

94%

Aberdeen Standard Investments ETFs (US) LLC49

Limited Liability company

100%

Aberdeen Standard Investments ETFs Advisors LLC49

Limited Liability company

100%

Aberdeen Standard Investments ETFs Sponsor LLC49

Limited Liability company

100%

Aberdeen Standard Investments Ireland Limited50

Ordinary shares

100%

Aberdeen Standard Investments Limited

Ordinary shares

100%

Aberdeen Standard Investments Luxembourg S.A.26

Ordinary shares

100%

Aberdeen Standard Investments Nominees Services (HK) Limited41

Ordinary shares

100%

Aberdeen Standard Investments Taiwan Limited37

Ordinary shares

100%

Aberdeen Standard Islamic Investments (Malaysia) Sdn. Bhd. 43

Ordinary shares

100%

Aberdeen Standard Life Asset Management Limited

Ordinary shares

100%

Aberdeen Standard Life Group Limited

Ordinary shares

100%

Aberdeen Standard Life Investments Limited

Ordinary shares

100%

Aberdeen Standard Life Limited

Ordinary shares

100%

Aberdeen Standard Limited

Ordinary shares

100%

Aberdeen Standard Overseas Investment Fund Management (Shanghai) Co., Ltd34

Ordinary shares

100%

Name of related undertaking

Share class1

% interest held

Aberdeen Sterling Long Dated Corporate Bond Fund3

OEIC

53%

Aberdeen Sterling Long Dated Government Bond Fund3

OEIC

34%

Aberdeen Trust Limited3

Ordinary shares

100%

Aberdeen UK Infrastructure Carry GP Limited3

Ordinary shares

100%

Aberdeen UK Infrastructure Carry Limited3

Ordinary shares

100%

Aberdeen UK Infrastructure GP Limited4

Ordinary shares

100%

Aberdeen Unit Trust Managers Limited3

Ordinary shares

100%

AEROF (Luxembourg) GP S.a.r.l. 26

Ordinary shares

100%

AIPP Pooling I S.A.26

Ordinary shares

100%

Airport Industrial GP Limited4

Ordinary shares

100%

Amberia General Partner Oy13

Ordinary shares

100%

Andean Social Infrastructure GP Limited11

Ordinary shares

100%

Arden Asset Management (UK) Limited23

Ordinary shares

100%

Arden Asset Management LLC21

Limited Liability Company

100%

Arthur House (No.6) Limited4

Ordinary shares

100%

Artio Global Investors Inc.14

Ordinary shares

100%

Asander Investment Management Limited51

Ordinary shares

100%

ASI (General Partner 2019 European PE B) Limited

Ordinary shares

100%

ASI (General Partner PE2) Limited

Ordinary shares

100%

ASI (General Partner PFF 2018) S.a.r.l32

Ordinary shares

100%

ASI (General Partner SOF IV) Limited

Ordinary shares

100%

ASI Hark Capital I GP, LLC17

Limited Liability company

100%

ASI Hark Capital II GP, LLC17

Limited Liability company

100%

ASI Private Equity 2 GP LP

Limited partnership

100%

ASI REMM GP LLP3

Limited Liability Partnership

100%

ASI Shin Global Investment GP Limited11

Ordinary shares

100%

ASPER (Luxembourg) GP S.a.r.l 26

Ordinary shares

100%

Baigrie Davies & Company Limited2

Ordinary shares

100%

Baigrie Davies Holdings Limited2

Ordinary shares

100%

Bedfont Lakes Business Park (GP2) Limited4

Ordinary shares

100%

Castlepoint General Partner Limited52

Ordinary shares

100%

Castlepoint Nominee Limited52

Ordinary shares

100%

Cockspur Property (General Partner) Limited23

Ordinary shares

100%

Cumberland Place Financial Management Limited2

Ordinary shares

100%

DEGI Beteiligungs GmbH48

Limited Liability Company

94%

Edinburgh Fund Managers Group Limited3

Ordinary shares

100%

Edinburgh Fund Managers Plc53

Ordinary shares

100%

Edinburgh Unit Trust Managers Limited3

Ordinary shares Deferred shares

100%

Elevate Portfolio Services Limited2

Ordinary shares

100%

FLAG Squadron Asia Pacific III GP LP11

Limited Partnership

100%

Focus Business Solutions Limited5

Ordinary shares

100%

Focus Holdings Limited5

Ordinary shares

100%

Focus Software Limited5

Ordinary shares

100%

Focus Solutions EBT Trustee Limited5

Ordinary shares

100%

Fraser Health Financial Management Limited2

Ordinary shares

100%

Griffin Nominees Limited4

Ordinary shares

100%

HDFC Asset Management Company Limited54

Ordinary shares Redeemable preference shares

30%

HDFC Life Insurance Company55

Ordinary shares

29%

Heng An Standard Life Insurance Company Limited56

Ordinary shares

50%

Ignis Asset Management Limited

Ordinary shares

100%

Ignis Cayman GP2 Limited11

Ordinary shares

60%

Ignis Cayman GP3 Limited11

Ordinary shares

60%

Ignis Fund Managers Limited

Ordinary shares

100%

Ignis Investment Services Limited

Ordinary shares

100%

Jones Sheridan Financial Consulting Limited2

Ordinary shares

100%

Jones Sheridan Holdings Limited2

Ordinary shares

100%

Name of related undertaking

Share class1

% interest held

Murray Johnstone Holdings Limited3

Ordinary shares

100%

Murray Johnstone Limited3

Ordinary shares

100%

North East Trustees Limited57

Ordinary A shares, Ordinary B shares

100%

Pace Financial Solutions Limited2

Ordinary A shares, Ordinary B shares, Ordinary C shares

100%

Pace Mortgage Solutions Limited2

Ordinary A shares, Ordinary B shares

100%

Parmenion Capital Ltd51

Ordinary shares

100%

Parmenion Capital Partners LLP51

Limited Liability Partnership

100%

Parmenion Investment Management Ltd.51

Ordinary shares

100%

Parmenion Nominees Limited51

Ordinary shares

100%

Parnell Fisher Child & Co. Limited2

Ordinary shares

100%

Parnell Fisher Child Holdings Limited2

Ordinary A shares, Ordinary B shares

100%

Pearson Jones & Company (Trustees) Limited57

Ordinary shares

100%

Pearson Jones Limited2

Ordinary A shares, Ordinary B shares

100%

Pearson Jones Nominees Limited57

Ordinary shares

100%

Phoenix Group Holdings plc6

Ordinary shares

20%

PT Aberdeen Standard Investments Indonesia38

Limited Liability Company

99%

PURetail Luxembourg Management Company S.a.r.l.18

Class A shares

50%

Regent Property Partners (Retail Parks) Limited4

Ordinary shares

100%

Reksa Dana Syariah Aberdeen Standard Syariah Asia Pacific Equity USD Fund38

Unit trust

21%

Residential Zoning Club General Partner Oy13

Ordinary shares

100%

Self Directed Holdings Ltd51

Ordinary A shares, Ordinary B shares, Ordinary C shares, Preference shares

100%

Self Directed Investments Ltd51

Ordinary shares

100%

Serin Wealth Limited2

Ordinary shares

100%

SL Capital Partners (US) Limited

Ordinary shares

60%

SL Capital Partners LLP

Limited Liability Partnership

60%

SLCP (Founder Partner Ignis Private Equity) Limited

Ordinary shares

60%

SLCP (Founder Partner Ignis Strategic Credit) Limited

Ordinary shares

60%

SLCP (General Partner 2016 Co-investment) Limited

Ordinary shares

60%

SLCP (General Partner CPP) Limited

Ordinary shares

100%

SLCP (General Partner EC) Limited

Ordinary shares

100%

SLCP (General Partner Edcastle) Limited

Ordinary shares

100%

SLCP (General Partner ESF I) Limited

Ordinary shares

100%

SLCP (General Partner ESF II) Limited

Ordinary shares

100%

SLCP (General Partner ESP 2004) Limited

Ordinary shares

100%

SLCP (General Partner ESP 2006) Limited

Ordinary shares

100%

SLCP (General Partner ESP 2008 Coinvestment) Limited

Ordinary shares

100%

SLCP (General Partner ESP 2008) Limited

Ordinary shares

100%

SLCP (General Partner ESP CAL) Limited

Ordinary shares

100%

SLCP (General Partner Europe VI) Limited

Ordinary shares

100%

SLCP (General Partner II) Limited

Ordinary shares

100%

SLCP (General Partner Infrastructure I) Limited

Ordinary shares

100%

SLCP (General Partner Infrastructure Secondary I) Limited

Ordinary shares

100%

SLCP (General Partner NASF I) Limited

Ordinary shares

100%

SLCP (General Partner NASP 2006) Limited

Ordinary shares

100%

SLCP (General Partner NASP 2008) Limited

Ordinary shares

100%

SLCP (General Partner Pearl Private Equity) Limited

Ordinary shares

100%

SLCP (General Partner Pearl Strategic Credit) Limited

Ordinary shares

100%

SLCP (General Partner SOF I) Limited

Ordinary shares

100%

SLCP (General Partner SOF II) Limited

Ordinary shares

100%

Name of related undertaking	Share class1			% interest held
SLCP (General Partner SOF III) Limited	Ordinary shares			100%
SLCP (General Partner Tidal Reach) Limited	Ordinary shares			100%
SLCP (General Partner USA) Limited	Ordinary shares			100%
SLCP (General Partner) Limited	Ordinary shares			100%
SLCP (Holdings) Limited	Ordinary shares			100%
SLIPC (General Partner SCF 1) Ltd	Ordinary shares			100%
SLIPC (General Partner Infrastructure II LTP 2017) Limited	Ordinary shares			100%
SLIPC (General Partner Infrastructure II) S.a.r.l32	Ordinary shares			100%
SLIPC (General Partner PMD Co-Invest 2017) Limited	Ordinary shares			100%
SLTM Limited	Ordinary shares			100%
Sorbin Systems Limited51	Ordinary shares			100%
Squadron Capital Asia Pacific GP, LP11	Limited Partnership			100%
Squadron Capital Asia Pacific II GP LP11	Limited Partnership			100%
Squadron Capital Management Limited11	Limited Liability Company			100%
Squadron Capital Partners Limited11	Limited Liability Company			100%
Standard Aberdeen Asset Management Limited	Ordinary shares			100%
Standard Aberdeen Group Limited	Ordinary shares			100%
Standard Aberdeen Investment Management Limited	Ordinary shares			100%
Standard Aberdeen Investments Limited	Ordinary shares			100%
Standard Aberdeen Limited	Ordinary shares			100%
Standard Life (Asia) Limited58	Ordinary shares			100%
Standard Life Aberdeen Asset Management Limited	Ordinary shares			100%
Standard Life Aberdeen Group Limited	Ordinary shares			100%
Standard Life Digital Solutions Limited	Ordinary shares			100%
Standard Life Investments - India Advantage Fund8	Ordinary shares			100%
Standard Life Investments (Corporate Funds) Limited	Ordinary shares			100%
Standard Life Investments (France) SAS59	Ordinary shares			100%
Standard Life Investments (General Partner CRED) Limited4	Ordinary shares			100%
Standard Life Investments (General Partner EPGF) Limited	Ordinary shares			100%
Standard Life Investments (General Partner European Real Estate Club) Limited4	Ordinary shares			100%
Standard Life Investments (General Partner European Real Estate Club II) Limited4	Ordinary shares			100%
Standard Life Investments (General Partner European Real Estate Club III) Limited4	Ordinary shares			100%
Standard Life Investments (General Partner GARS) Limited	Ordinary shares			100%
Standard Life Investments (General Partner GFS) Limited	Ordinary shares			100%
Standard Life Investments (General Partner Global Tactical Asset Allocation) Limited	Ordinary shares			100%
Standard Life Investments (General Partner MAC) Limited	Ordinary shares			100%
Standard Life Investments (General Partner PDFI) Limited	Ordinary shares			100%
Standard Life Investments (General Partner UK PDF) Limited	Ordinary shares			100%
Standard Life Investments (General Partner UK Shopping Centre Feeder Fund LP) Limited4	Ordinary shares			100%
Standard Life Investments (Hong Kong) Limited60	Ordinary shares			100%
Standard Life Investments (Jersey) Limited61	Ordinary shares			100%
Standard Life Investments (Mutual Funds) Limited	Ordinary shares			100%
Standard Life Investments (PDF No. 1) Limited61	Ordinary shares			50%
Standard Life Investments (Private Capital) Limited	Ordinary shares			100%
Standard Life Investments (Singapore) Pte. Ltd62	Ordinary shares			100%
Standard Life Investments (USA) Limited	Ordinary shares			100%
Standard Life Investments Brent Cross General Partner Limited	Ordinary shares			100%
Standard Life Investments European RE Club (Offshore Feeder) Ltd11	Ordinary shares			100%
Standard Life Investments European RE Club II (Offshore Feeder) Ltd11	Ordinary shares			100%
Standard Life Investments Global Absolute Return Strategies Master Fund Limited 11	Ordinary shares			100%
Standard Life Investments Global Absolute Return Strategies Offshore Feeder Fund Limited11	Ordinary shares			100%
Standard Life Investments Global Focused Strategies Master Fund Limited11	Ordinary shares			100%
Standard Life Investments Global Focused Strategies Offshore Feeder Fund Limited11	Ordinary shares			100%
Standard Life Investments Global SICAV
Standard Life Investments Global SICAV Global Equity Unconstrained Fund63	SICAV			22%
Standard Life Investments Global SICAV II
Standard Life Investments Global SICAV II Enhanced-Diversification Multi Asset Fund63	SICAV			66%
Standard Life Investments Global SICAV II Global Equity Impact Fund63	SICAV			55%
Name of related undertaking			Share class1	% interest held
Standard Life Investments Global SICAV II MyFolio Multi-Manager I Fund63			SICAV	35%
Standard Life Investments Global SICAV II MyFolio Multi-Manager II Fund63			SICAV	24%
Standard Life Investments Global SICAV II MyFolio Multi-Manager III Fund63			SICAV	29%
Standard Life Investments Global SICAV II MyFolio Multi-Manager IV Fund63			SICAV	36%
Standard Life Investments Global SICAV II MyFolio Multi-Manager V Fund63			SICAV	52%
Standard Life Investments GTAA Company11			Ordinary shares	100%
Standard Life Investments Limited			Ordinary shares	100%
Standard Life Investments Multi Asset Class Company11			Ordinary shares	100%
Standard Life Investments Securities LLC14			Ordinary shares	100%
Standard Life Investments UK Equity Impact - Employment Opportunities Fund			OEIC	90%
Standard Life Investments UK Shopping Centre Feeder Fund Company Limited4			Ordinary shares	100%
Standard Life Portfolio Investments Limited			Ordinary shares	100%
Standard Life Portfolio Investments US Inc64			Ordinary shares	100%
Standard Life Premises Services Limited			Ordinary shares	100%
Standard Life Savings Nominees Limited			Ordinary shares	100%
Tenet Group Limited65			Ordinary B shares	25%
Tenon Nominees Limited3			Ordinary shares	100%
The Coaching Platform Limited5			Ordinary shares	100%
The Munro Partnership Ltd.66			Ordinary shares	100%
Threesixty Partnerships Limited9			Ordinary shares	100%
Touchstone Insurance Company Limited67			Ordinary shares	100%
Two Rivers One Limited30			Ordinary shares	100%
Two Rivers Two Limited30			Ordinary shares	100%
UK PRS Opportunities General Partner Limited4			Ordinary shares	100%
Waverley Healthcare Private Equity Limited3			Ordinary shares	100%
Wealth Horizon Ltd51			Ordinary shares	100%
Wise Trustee Limited51			Ordinary shares	100%

¹ OEIC = Open-ended investment company 

   SICAV = Société d'investissement à capital variable

   ICAV = Irish collective asset-management vehicle

Registered offices

²    14th Floor, 30 St Mary Axe, London, EC3A 8BF

³    10 Queen's Terrace, Aberdeen, AB10 1XL

⁴    Bow Bells House, 1 Bread Street, London, EC4M 9HH

⁵    Cranford House, Kenilworth Road, Blackdown, Leamington Spa, CV32 6RQ

⁶    Juxon House, 100 St Paul's Churchyard, London, EC4M 8BU

⁷    133 Cecil Street, #13-03 Keck Seng Tower, 069535, Singapore

⁸    c/o SGG Fund Services (Mauritius) Ltd, 33 Edith Cavell Street, Port Louis, 11324, Mauritius

⁹    2nd Floor, The Royals, Altrincham Road, Sharston, Manchester, M22 4BJ

¹⁰   2-8 avenue Charles De Gaulle, L-1653 Luxembourg, Luxembourg

¹¹   c/o Maples Corporate Services Limited, Ugland House, PO Box 309, George Town, KY1-1104, Cayman Islands

¹²   Tuborg Havnevej 15, 2nd Floor, DK-2900 Hellerup, Denmark

¹³   Kaivokatu 6, Helsinki, 00100, Finland

¹⁴   c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE, 19808, USA

¹⁵   Henrik Ibsens gate 100, PO Box 2882 Solli, 0230 Oslo, Norway

¹⁶   Box 3039, Stockholm, 103 63, Sweden

¹⁷   c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE, 19808, USA

¹⁸   80, Route d'Esch, L-1470 Luxembourg, Luxembourg

¹⁹   Office Unit 8, 6th Floor, Al Khatem Tower, Abu Dhabi Global Market Square, Al Marya Island, PO Box 764605, Abu Dhabi, United Arab Emirates

²⁰   1266 East Main Street, 5th Floor, Stamford, CT 06902, USA

²¹   c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, DE 19801 Wilmington, USA

²²   Rua Joaquim Floriano, 913 - 7th floor - Cj. 71 São Paulo SP 04534-013, Brazil

²³   1 More London Place, London, SE1 2AF

²⁴   29 Rue De Berri, Paris, 75008, France

²⁵   40 Upper Mount Street, Dublin 2, Republic of Ireland

²⁶   35a Avenue John F. Kennedy, L-1855 Luxembourg, Luxembourg

²⁷   State Street (Guernsey) Limited, First Floor Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 6HJ

²⁸   First Floor, Sir Walter Raleigh House, 48-50 Esplanade, St Helier, Jersey, JE2 3QB

²⁹   Suite 26.3, Level 26, Menara IMC, Letter Box No.66, No. 8, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia

³⁰   Lime Grove House,Green Street, St Helier, Jersey, JE1 2ST

³¹   Ahtri 6a, Tallinn, 10151, Estonia

³²   2 Boulevard de la Foire, L-1528 Luxembourg, Luxembourg

³³   WTC, H-Tower, 20th Floor, Zuiplein 166, 1077 XV Amsterdam, The Netherlands

³⁴   West Area, 2F, No.707 Zhangyang Road, China (Shanghai) Pilot Free Trade Zone

³⁵   Bangkok City Tower, 28th Floor, 179 South Sathorn Road, Thungmahamek, Sathorn, Bangkok, 10120, Thailand

³⁶   Liberte House, 19-23 La Molle Street, St Helier, Jersey, JE4 5RL

³⁷   8F-1, No. 101, Songren Road, Taipei City, 110, Taiwan, Republic of China

³⁸   16th Floor, Menara Dea Tower 2, Kawasan Mega Kuningan, Jl Mega Kuningan Barat Kav. E4.3 No. 1-2, 12950 Jakarta, Indonesia

³⁹   21 Church Street, #01-01, Capital Square Two, 049480, Singapore

⁴⁰   44 Chipman Hill, Suite 1000 POX Box 7283, Stn. "A" Saint John, N.B. E2L 4S6, Canada

⁴¹   6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong

⁴²   Otemachi Financial City Grand Cube 9F, 1-9-2 Otemachi, Chiyoda-ku, 100-0004, Tokyo, Japan

⁴³   Suite 1005, 10th Floor, Wisma Hamzah-Kwong Hing No.1, Leboh Ampang 50100 Kuala Lumpur, Malaysia

⁴⁴   Schweizergasse 14, Zurich, 8001, Switzerland

⁴⁵   Level 10, 255 George Street, Sydney, NSW 2000, Australia

⁴⁶   13th Fl., B Tower (Seocho-dong, Kyobo Tower Building), 465, Gangnam-daero, Seocho-gu, Seoul, Korea

⁴⁷   AC 82 NO. 10 60 P 5 Bogota DC, Columbia

⁴⁸   Bockenheimer Landstrasse 25, 60325 Frankfurt am Main, Germany

⁴⁹   712 5th Ave, New York, NY 10019, USA

⁵⁰   24 Merrion Row, Dublin 2, Republic of Ireland

⁵¹   2 College Square, Anchor Road, Bristol , BS1 5UE

⁵²   11th Floor, Two Snowhill, Birmingham, B4 6WR

⁵³   7th Floor, 40 Princes Street, Edinburgh, EH2 2BY

⁵⁴   HDFC House, 2nd floor, H.T. Parekh Marg, 165-166, Backbay Reclamation, Churchgate, Mumbai- 400 020, India

⁵⁵   Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai - 400011, Maharashtra, India

⁵⁶   18F, Tower II, The Exchange, 189 Nanjing Road, Heping District, Tianjin, People's Republic of China, 300051

⁵⁷   Clayton Wood Close, West Park Ring Road, Leeds, LS16 6QE

⁵⁸   40th Floor, Tower One, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong

⁵⁹   100 Avenue des Champs Elysees, 1 Rue de Berri, F- 75008, Paris, France

⁶⁰   30th Floor, Jardine House, One Connaught Place, Hong Kong

⁶¹   44 Esplanade, St Helier, Jersey, JE4 9WG

⁶²   8 Marina Boulevard #05-02, Marina Bay Financial Centre Tower 1 01 8981, Singapore

⁶³   2-4, Rue Eugène Ruppert, L-2453 Luxembourg, Luxembourg

⁶⁴   1735 Market St, 32nd FL, Philadelphia, PA 19103, USA

⁶⁵   5 Lister Hill, Horsforth, Leeds, LS18 5AZ

⁶⁶   Citadel House, 6 Citadel Place, Ayr, KA7 1JN

⁶⁷   c/o Aon, PO Box 33, Maison Trinity, Trinity Square, St Peter Port, Guernsey GY1 4AT

 

END

 

 

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